Identify and explain the assertions that the auditor will check by performing the following audit procedures: (i) Employee benefit expenses…

CA Intermediate · Auditing and Ethics · RTP · September 2025
Identify and explain the assertions that the auditor will check by performing the following audit procedures: (i) Employee benefit expenses recognised during the period relates to the current accounting period only. (ii) Employee benefit expenses in respect of all personnel have been fully accounted for. (iii) Any inventory held by the entity on behalf of another entity has not been recognised as part of inventory of the entity. (iv) Recorded sales represent goods which were ordered by valid customers and were despatched and invoiced in the period.

Suggested Answer and Working Notes:

(i) The auditor will check the cut-off assertion to ensure that whether all income and expenses are reported in the correct accounting period. Cut-off is a separate assertion because the substantive procedures to verify it are typically different from those applied to the other components of completeness. (ii) The auditor will check the completeness assertion for the same to ensure that all transactions that were supposed to be recorded have been recognised in the financial statements. Transactions have not been omitted. (iii) The auditor will check rights & obligations assertion to ensure that the entity has the right to assets i.e. (whether the entity has ownership and legal title to assets) and the liabilities recognised in the financial statements represent all the entity's obligations to repayment as at a given date. (iv) The auditor will check the occurrence assertion for the same to ensure that transactions recognised in the financial statements have occurred and relate to the entity.

Topics: Audit of Items of Financial Statements

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