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The following is an audit procedure that an auditor performs relating to the financial report audit...

The following is an audit procedure that an auditor performs relating to the financial report audit of a client.

State the most appropriate assertion which is being tested by the audit procedure.

Note: No marks will be given if more than one category of assertion is answered.

Determine whether long-term receivables and related party receivables are reported separately in the financial statements.

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Answer #1

Completeness assertion is the most appropriate assertion which is being tested by the audit procedure. Reason being the purpose of the audit procedure is to assess and verify whether the transaction is complete in all manners or not.

Only long term receivables are shown separately in the financial statements. Reason being it is the statutory requirement to report long term receivables and short term receivables separately. And in most of the cases trade receivables outstanding for a period of more than 6 months are been classified as long term receivables and to be shown separately in financial statements.

Related party receivables are not shown separately in the financial statements. However, as per statutory requirement the disclosure of related party receivable must be given in the notes to financial statements.

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