Should your test for unrecorded liabilities be eliminated

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Question: Unrecorded Liabilities Procedures. You are in the final stages of your audit of the financial statements of Ozine Corporation for the year ended December 31, 2014, when the corporation's president consults you. The president believes there is no point to your examining the 2015 voucher register and testing data in support of 2015 entries. She stated that any bills pertaining to 2014 that were received too late to be included in the December voucher register were recorded by a year-end journal entry and the internal auditor tested for unrecorded liabilities after the year-end. The president will provide you a letter certifying that there are no unrecorded liabilities.

Required: a. Should your procedures for unrecorded liabilities be affected by the fact that the client made a journal entry to record 2014 bills that were received later? Explain.

b. Should your test for unrecorded liabilities be affected by the fact that a letter is obtained in which a responsible management official certifies that, to the best of that person's knowledge, all liabilities have been recorded? Explain.

c. Should your test for unrecorded liabilities be eliminated or reduced because of the internal audit work? Explain.

d. What sources, in addition to the 2015 voucher register, should you consider for locating possible unrecorded liabilities?

Reference no: EM131618371

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