The following is a copy of the auditor’s working paper relating to the search for unrecorded liabilities for the client New Millennium Ecoproducts. 

Required 

(a) Why does an auditor search for unrecorded liabilities? 

(b) Explain the test documented in section 1. Does this test reveal any unrecorded liabilities? 

(c) Explain the test documented in section 2. Why is “N/A” recorded in the “Accrued at year end?” column?

Transcribed Image Text:

CLIENT: New Millennium Ecoproducts 12/31/2016 $00 Period end: EY Currency/unit: N04-SEARCH FOR UNRECORDED LIABILITIES Reference NO4 Section 1: Review of subsequent disbursements Delivery date / Disbursement type (Disbursements after year end) Date of Accrued Invoice details Disbursement service TM/ TM/Ref provided Ref TM/ Ref Comments Disbursement at year reference Description Date Amount Recipient Date Amount end? 01/31/2017 (1,700) SYX Ltd 12/01/2017 (1,500) Gas bill 12/16 01/31/2017 (2,500) JK9 Ltd 01/13/2017 (2,000) Consultants' invoices Wire transfer 2016 2016 455 768 Yes 545 555 Yes Wire transfer 12/16 31/01/2017 (2,044) HHH Ltd 01/13/2017 (2,044) Flight to London in Cheque 666 633 N/A 2017 N/A etc.... FY17 Section 2: Review of invoices received after year end Delivery date / Date of service TM/ TM/Ref provided Ref Accrued Invoice details at year end? TM/ Ref Comments Amount Date Description 01/05/2017 (900) 01/03/2017 (2,000) Consultants' invoices Switches 2017 N/A N/A 2016 Yes 12/16 01/04/2017 (1,500) Casual staff Dec. 2016 Yes 2016 01/04/2017 etc.... Key to audit tickmarks: / Agrees to Invoice details * Agrees to delivery note / details of service provided * Agrees to details of accrued liabilities Comments: / No error detected (in addition to the one detected during our cut-off procedures)