Question

Discuss the importance of the completeness assertion as it relates to auditing sales revenue.

Applied Auditing and Risk assesment

Answer 1

Audit procedures is one of the most importance thing that auditors need to make sure that they are well and correctly prepare and tailor to minimize audit works and risks. Revenues are one of the sensitive areas that auditors need to place their great attention on.

This is because it is mater so much on the users of financial statements. Revenues are also the sensitive areas where the risks of manipulation, risks or errors are likely to happen on most of entity

Completeness assertion concern the completeness of recording in the financial statements. The incomplete record of revenues might be happen because of many difference reasons including entity’s process and procedure could not capture all the revenues, errors and sometime fraud.

We usually perform substantive analytical procedures by looking at the trends from the previous months or years and the relationship between sale revenue and other independent items such as cost of sales, selling expenses and the growth of sales in the sectors.

While occurrence tests the revenues that had been recorded to ensure they actually exist, the completeness tests the revenues that occurred to ensure they have been recorded.