COMPLETENESS Management's completeness assertions address whether all transactions and accounts that should be presented in the financial statements are so included. For example, all expenses incurred during a given period must be recorded, and all amounts owed to vendors must be included in the accounts payable balance.
When conducting tests to verify the completeness assertion, auditors search for understatements. Testing begins with the supporting source documents and progresses toward the accounting records (see "Testing for Assertions" on page 24). For example, an auditor may search for unrecorded purchases by selecting a sample of receiving reports and tracing the transactions to the purchases journal and the accounts payable records. Because unrecorded transactions are difficult to discover through substantive tests, it is essential that organizations develop adequate controls, such as the use of prenumbered documents, to ensure that all transactions are captured by the accounting system.