Accounting · Auditing and Assurance
A client, a software company, recognises revenue upon 'successful installation' of its product, which is often highly subjective. The auditor has determined there is a high inherent risk of overstating revenue (Occurrence assertion). Which of the following substantive procedures provides the most persuasive and direct evidence regarding the Occurrence assertion for the year-end revenue balance?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Circularise a sample of customers to confirm the total amount owed at the year-end.
- 2Calculate the debtor days ratio and compare it to the prior year.
- 3Select a sample of sales invoices recorded around year-end and inspect the original customer sign-off certificates for the date of successful installation.✓
- 4Vouch a sample of customer receipts recorded post year-end to the year-end sales ledger.
Correct answer
Select a sample of sales invoices recorded around year-end and inspect the original customer sign-off certificates for the date of successful installation.
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