Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 67

An internal audit activity is participating in the due diligence work for an acquisition that a company is considering. One engagement objective is to determine if the acquisition's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective?

Answer options

• A. Examine supporting documentation of subsequent (after-period) cash disbursements and verify period of liability.
• B. Send confirmations, including zero-balance accounts, to vendors with whom the company normally does business.
• C. Select a sample of accounts payable from the accounts payable list and verify the supporting receiving reports, purchase orders, and invoices.
• D. Trace receiving reports issued before the period end to the related vendor invoices and accounts payable list.

Correct answer: C

Explanation

The correct answer is C because verifying supporting documents for selected accounts payable does not directly confirm if all outstanding liabilities are included. In contrast, procedures A, B, and D are relevant as they focus on confirming the existence of liabilities through subsequent cash disbursements, vendor confirmations, and tracing back to invoices.