In short
Vouching selects items from the accounting records and examines the supporting documents; tracing selects source documents and follows them into the records. The direction decides which assertion is tested.
Key takeaways
- Vouching (records to documents) tests existence or occurrence: the risk of overstatement.
- Tracing (documents to records) tests completeness: the risk of understatement.
- The search for unrecorded liabilities is a form of tracing.
Where it's tested
AUD: Evidence: Types & Procedures — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor selects recorded sales transactions from the sales journal and examines the related shipping documents and customer orders. This procedure primarily tests which assertion?