Write a STOD to search for Unrecorded Liabilities? (completeness assertion). Hint : How would an auditor find evidence of unrecorded liabilities?

STOD stands for Source, Timing, Objective, and Procedure. Here's how an auditor might use STOD to search for unrecorded liabilities:

1. Source: The auditor would start by identifying the sources of information that could contain evidence of unrecorded liabilities. These sources could include the company's financial statements, bank statements, invoices, contracts, and other relevant documents.

2. Timing: The timing of the audit procedure is crucial. The auditor would need to determine the appropriate period to review for potential unrecorded liabilities. This could be the end of the fiscal year, the end of each quarter, or any other period that is relevant to the company's operations and financial reporting.

3. Objective: The objective of the audit procedure is to find evidence of unrecorded liabilities. This could involve identifying discrepancies between the company's recorded liabilities and the information found in the sources identified in the first step. The auditor would also look for any signs of irregularities or fraudulent activities that could indicate the existence of unrecorded liabilities.

4. Procedure: The auditor would then carry out the audit procedure. This could involve reviewing the company's financial statements and other documents, conducting interviews with the company's management and staff, and performing other relevant audit procedures. The auditor would document any findings and evaluate them in the context of the company's overall financial situation.

In conclusion, the STOD approach provides a systematic way for auditors to search for unrecorded liabilities and ensure the completeness assertion.