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A retail company's ERP automatically posts revenue when goods are dispatched. The auditor is testing the "completeness" assertion for sales. The MOST effective procedure is:
AInspect physical inventory at year-end
BInquire of the sales manager about cut-off
CTrace shipping documents around year-end into the GL
DConfirm balances with top 10 customers
Answer & Solution
Correct answer: D. Confirm balances with top 10 customers
1. Completeness for sales requires tracing FROM source (shipping documents) TO recorded amounts.
2. Tests in the other direction address occurrence/existence.
3. Around year-end, this also covers cut-off - the highest risk window.
_Source: ICAI BoS CA Final Paper 3, Ch 4 "Special Aspects of Auditing in an Automated Environment"_
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