ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which type of substantive test focuses on completeness?

1. Reviewing contracts and agreements

2. Confirmations with third parties

3. Review of post year-end items and analytical reviews

4. Reviewing employee expense reports

The correct answer is: Review of post year-end items and analytical reviews

The focus of the chosen answer is on the completeness assertion, which is concerned with ensuring that all transactions and accounts that should be recorded are included in the financial statements. Reviewing post year-end items and performing analytical reviews are substantive procedures that help auditors determine whether any significant transactions or events occurring after the reporting period have been accounted for, thus ensuring that the financial statements reflect all relevant information. By examining post year-end items, auditors can identify transactions that might impact the amounts reported as of the year-end and ensure that there are no unrecorded liabilities or significant adjustments that could affect the accuracy and completeness of the financial statements. Analytical reviews allow auditors to assess whether reported figures are consistent with expected trends and ratios, which further supports the completeness assertion. In contrast, while reviewing contracts and agreements may provide insight into obligations or expenses, it does not inherently address whether all transactions are recorded. Confirmations with third parties are primarily used to verify existence and accuracy rather than completeness, as they often validate that recorded assets and liabilities exist but do not necessarily indicate that all transactions have been captured. Lastly, reviewing employee expense reports aids in validating expenses and their proper classification but does not encompass the broader scope of ensuring the completeness of all financial statement items.