If auditors believe there is a risk that expenses incurred before year-end will be excluded from the current year's expenses, they will:
A) Send out confirmation requests to a sample of the client's debtors.
B) Trace transactions recorded close to year-end to source documentation.
C) Perform analytical review analysis on the client's statement of financial position.
D) None of the above.

Question

Quizplus · Accepted Answer

By tracing transactions recorded close to year-end to source documentation, auditors can ensure that all expenses that were incurred have been included in the current year's expenses. Confirmation requests to debtors and analytical review analysis of the statement of financial position would not be as effective in addressing the specific risk mentioned in the question.

If Auditors Believe There Is a Risk That Expenses Incurred