This question tested candidates’ knowledge of substantive procedures and their understanding of which financial statement assertion was being verified. This question was answered incorrectly by the majority of candidates.

When assessing substantive procedures it is imperative that candidates are able to differentiate between the assertions being tested. This skill was also required in answering long question 6b.

The three answer options provided were all valid substantive procedures for auditing non-current assets, however they each focused on a different assertion. The key to passing this type of question was to identify what assertion each procedure was testing and to correctly identify the procedure that would test for completeness.

Procedure A involved physical verification of non-current assets and the direction of the test was from the register to the actual asset. If the physical asset could not be verified then non-current assets would be overstated, hence this is a test for existence.

Procedure C focused on verifying the amount of disposal proceeds and hence addressed the assertion of valuation. Procedure B originated from the repairs and maintenance account and focused on identifying any items of a capital nature.

If items were included in the repairs and maintenance account instead of being capitalised then this would result in non-current assets being understated or incomplete.

Therefore the correct answer was B.

Future candidates should take note that they must be able to identify correctly the type of procedure given, and for substantive tests they need to be able to identify the assertion being tested.