[barelystayingsane]

A Becker question says that the purpose of tracing a sample of inventory tags to a client’s computerized listing of inventory items is to determine whether the inventory items represented by tags were included on the listing. In the answer, it says that the directional test of tracing is generally used to test the existence of an asset; in this case, this would be noted by whether the inventory items represented by the tags were included on the listing.

According to Mike Brown’s diagram he had us draw on page A4-36, going from the tags to the inventory report is a test of COMPLETENESS, not existence.

Which one is correct? I’m inclined to say completeness is correct.

Thanks!

[barelystayingsane]

Along the same lines, another Becker question says that tracing items from the tag listing back to the physical inventory quantities is a test for existence, but the diagram says that this is a test for completeness. The only explanation I can think of for this second instance is that they're differentiating between the inventory report and the actual physical inventory.

Thoughts?

[Jennifer241]

Tracing from a source doc to the general ledger = testing whether or not the amount on the general ledger is complete = Completeness

Tracing from the GL to a supporting document = testing for existence, testing that what they have posted on the general ledger does indeed exist = Existence.

AUD - Jan 9,13 Pass
REG - Aug 30,13 Pass
BEC - Oct 26,13 Pass
FAR - Dec 4,13 Pass

Licensed CPA in the state of Oregon

[barelystayingsane]

Correct me if I'm wrong, but I don't think inventory tags or inventory report sheets are source documents or general ledgers….

[Jennifer241]

They are source documents.

Check, cash register slip, deposit slip, invoice, voucher, etc., that evidences a business dealing. Source documents are a critical part of an audit trail for establishing the authenticity, and tracing the history, of a transaction.

AUD - Jan 9,13 Pass
REG - Aug 30,13 Pass
BEC - Oct 26,13 Pass
FAR - Dec 4,13 Pass

Licensed CPA in the state of Oregon

[Jennifer241]

A general ledger is not a source doc, but the inventory tags are source doc's.

Source doc -> General Ledger = Completeness

General Ledger -> Source doc = Existence

They are opposite of each-other.

AUD - Jan 9,13 Pass
REG - Aug 30,13 Pass
BEC - Oct 26,13 Pass
FAR - Dec 4,13 Pass

Licensed CPA in the state of Oregon

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