Question

Porter and Sly are assigned to perform the audit of Core Beliefs Yoga Company. During the audit, it was discovered that the amount of sales reported on Core Belief's income statement was understated because one week’s purchasing transactions were not recorded due to a computer glitch.

• Porter claims that this problem represents a violation of the management assertion regarding existence because the reported account balance was not real.

• Sly argues that the completeness assertion was violated because relevant data was omitted from the records.

Which auditor is correct? Explain. I know Sly is right, but why?

Answer 1

Sly is Right

Explnation:-

She is right because during the audit they found a mistake in income statement which is voilating a Completness assertion

Completness assertion is one of the assertion where financial statement have to inculde all the items(purchase,sales,expense and e.t.c) for a given accounting period and In give Case, one purchase transaction is missing.

It is a duty of an auditor to check every assertion and document any discrepancy which is found.