By tracing receiving reports issued at and before year- end to vendors' invoices and making sure they are included in accounts payable, the auditor is testing for:
A) theft of merchandise by employees.
B) lapping.
C) kiting.
D) unrecorded obligations.

Question

Quizplus · Accepted Answer

By tracing receiving reports to vendor invoices and ensuring they are included in accounts payable, the auditor is testing for unrecorded obligations or liabilities. This helps ensure that all amounts owed at year-end are properly recorded in the financial statements. Choices A, B, and C are all different forms of fraud and are not related to this particular audit test.

By Tracing Receiving Reports Issued at and Before Year- End