CAF-8 · Chapter 8 · Question 1 of 10
An auditor is verifying the ownership of a client's fleet of commercial vehicles. Which of the following is the most appropriate source of evidence for the assertion of 'Rights and Obligations'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Inspection of the original registration books (v-5 documents) and insurance certificates in the name of the company.
Explanation
To verify 'Rights and Obligations' (ownership), the auditor must inspect legal title documents like registration papers or purchase contracts. Physical inspection only proves 'Existence'.
More Substantive Procedures: Non-Current Assets MCQs
- Q3Which of the following is NOT a substantive procedure for verifying the valuation of property, plant, and equipment (PPE)?
- Q4An auditor discovers that a client has capitalized the entire cost of a major factory roof repair as a non-current asset. The repair only…
- Q5Which procedure addresses the 'Completeness' assertion of non-current assets?
- Q6A client recently revalued its head office building. According to ISA 540, what is the auditor's primary responsibility regarding this…
- Q7An auditor is testing the depreciation of fully depreciated assets that are still in use. What is the correct accounting treatment for…