This is your first audit of Storm Ltd.During the initial planning you have discovered that the client lacks receiving reports and a policy as to the timing within which to record purchases.You have also observed that there are many adjusting entries to accounts payable, which is a material balance.The audit assertion most at risk when auditing accounts payable is:
A)existence.
B)valuation and allocation.
C)completeness.
D)rights and obligations.

Question

Quizplus · Accepted Answer

The completeness assertion is most at risk when auditing accounts payable due to the lack of receiving reports and a policy for recording purchases, as well as the numerous adjusting entries. This raises concerns about whether all liabilities have been recorded, including any potential unrecorded liabilities. The existence assertion deals with whether the accounts payable actually exist and relate to the entity, which is not necessarily at risk in this scenario. The valuation and allocation assertion pertains to the accuracy of amounts assigned to accounts, which may be affected by the lack of policies, but is not the primary concern. The rights and obligations assertion deals with whether the entity has legal or beneficial ownership of the accounts payable, which is also not necessarily at risk in this scenario.

This Is Your First Audit of Storm Ltd