(c) (ii) A more appropriate test would be to make the selection from goods received notes (GRNs), as the issue of a GRN is normally the point at which liability is accepted and is in any event the document used to update the non-current assets budget. In other words, it is important to identify your audit objective and then to decide on what sample will be the most appropriate to aid you in meeting that objective. The GRNs would be traced to the recorded purchase invoices to ensure that the latter were complete and then to the entries in the non-current assets register and to the updating entries in the budget to ensure that these too were complete.
An additional appropriate test would be to select a sample of plant and equipment visible on the shop floor and trace them to the non-current assets register to identify whether they have been:
– included in the register
– noted against the budget as purchased
– paid for by tracing purchase invoice through to payment.
(Tutorial note: The auditor would of course wish to prove that the GRNs are complete and might select a sample of purchase orders and trace them to the GRNs to ensure GRNs have been prepared in each case or the order rejected for good reason. Another appropriate test on the GRNs would be to prove that the numbering sequence was complete. This list is not exhaustive and other completeness procedures may be appropriate.)
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