@harris016 in reply to your question included in quotes below….
I believe you have a solid understanding of the various assertions covered in this problem (completeness, cutoff, existence), and the topic can be quite confusing. The key phrase to focus on in the question is “most appropriate”. The assertions of completeness and cutoff are very closely related, and that specific procedure seems most appropriate because as the explanation states, “cutoff procedures provide assurance that goods in transit are appropriately included or excluded from inventory (inventory is complete). Since inventory is a balance sheet item, the auditor is generally most concerned about the ending balance, and that answer, to me, appears most appropriate to ensure completeness of the ending balance. To ensure completeness, an auditor would:
Trace inventory counts TO accounting records (the act of TRACING, do not confuse with VOUCHING)
TRACING – tests the assertion of COMPLETENESS. It requires going from SOURCE to BOOKS.
VOUCHING – tests the assertion of EXISTENCE OR OCCURRENCE. It requires going from BOOKS to SOURCE.
Answer (d):
Tracing inventory items from the tag listing back to the physical inventory quantities.
Is the act of vouching, as the tag listing (the accounting records/books) is being tied back to the physical inventory quantities (the source).
It also doesn't help that the questions mentions tracing in answer d, when in fact the answer is the act of vouching, which by its nature deals with tracing, but from books to source.
Not sure if I make complete sense, or if I'm just coming across as a ramblin' man. In any case try to remember:
TRACING – Source
> Books/Accounting Records – COMPLETENESS
VOUCHING – Books/Accounting Records
> Source – EXISTENCE/OCCURRENCE
Hope this helps.
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