Directional testing is used to confirm which elements?

Directional testing is used to confirm which elements?

• A. Existence only
• B. Completeness only
• C. Existence and Completeness
• D. Valuation

Answer: (C)

Directional testing uses two directions of testing to cover what actually exists and what has been captured. It relies on tracing and vouching. Tracing moves from source documents to the accounting records, which helps confirm completeness—ensuring every item that should be recorded is in the ledgers. Vouching moves from the accounting records back to the source documents, which helps confirm existence—ensuring the recorded items actually exist and have supporting evidence. Taken together, this approach checks both existence and completeness for amounts and disclosures. It does not directly validate valuation, which is addressed by other procedures. For example, tracing supplier invoices into the purchases ledger tests completeness, while vouching ledger balances back to invoices tests existence.

Directional testing uses two directions of testing to cover what actually exists and what has been captured. It relies on tracing and vouching. Tracing moves from source documents to the accounting records, which helps confirm completeness—ensuring every item that should be recorded is in the ledgers. Vouching moves from the accounting records back to the source documents, which helps confirm existence—ensuring the recorded items actually exist and have supporting evidence. Taken together, this approach checks both existence and completeness for amounts and disclosures. It does not directly validate valuation, which is addressed by other procedures. For example, tracing supplier invoices into the purchases ledger tests completeness, while vouching ledger balances back to invoices tests existence.