When the auditor examines the client's documents and records to substantiate the information in the financial statements, it is commonly referred to as:
A) confirmation.
B) vouching.
C) inquiry.
D) physical examination.

Question

Quizplus · Accepted Answer

Vouching is the process of examining the client's documents and records (such as invoices, receipts, and bank statements) to support the information in the financial statements. It involves tracing data from the financial statements back to the original source documents to ensure accuracy and completeness. It is one of the key procedures used by auditors to obtain evidence about the validity of the amounts and disclosures in the financial statements. Confirmation and inquiry are also audit procedures, but they involve different types of evidence gathering. Physical examination is a more specific term that refers to physically inspecting assets or inventory to verify their existence and condition.

When the Auditor Examines the Client's Documents and Records to Substantiate