Which statement about the existence and completeness objectives is not true?

Which statement about the existence and completeness objectives is not true?

• A. The existence and completeness objectives emphasize opposite audit concerns
• B. Existence deals with overstatements and completeness deals with understatements
• C. Existence deals with understatements and completeness' deals with overstatements
• D. The completeness objective deals with unrecorded transactions

Answer: (C)

Existence and completeness are two audit objectives that address different directions of misstatement. Existence ensures that recorded assets and liabilities actually exist at the balance sheet date, guarding against overstating the financial position by including items that aren’t real. Completeness ensures that all transactions and accounts that should be recorded are indeed recorded, guarding against understating by omitting items. The statement that existence deals with understatements and completeness deals with overstatements is not true because it reverses these roles. The other descriptions align with the concepts: existence relates to preventing overstatements, completeness relates to capturing unrecorded transactions.

Existence and completeness are two audit objectives that address different directions of misstatement. Existence ensures that recorded assets and liabilities actually exist at the balance sheet date, guarding against overstating the financial position by including items that aren’t real. Completeness ensures that all transactions and accounts that should be recorded are indeed recorded, guarding against understating by omitting items. The statement that existence deals with understatements and completeness deals with overstatements is not true because it reverses these roles. The other descriptions align with the concepts: existence relates to preventing overstatements, completeness relates to capturing unrecorded transactions.