Final answer:
Unusual discrepancies between the entity's records and confirmation replies, timely and accurate recording of liabilities, and clear and concise documentation of liability transactions are documentary symptoms that relate to understatement of liability fraud. Correct option is a.
Step-by-step explanation:
A documentary symptom that relates to understatement of liability fraud is unusual discrepancies between the entity's records and confirmation replies. This means that there are inconsistencies or abnormal differences between what the entity's records show and the information provided by external parties or sources.
Another important documentary symptom to consider is the timely and accurate recording of liabilities in the financial statements. If liabilities are not recorded or are recorded incorrectly or late, it can be a red flag for potential understatement of liability fraud. For instance, deliberately delaying the recording of liabilities can make the financial statements appear more favorable than they actually are.
Lastly, clear and concise documentation of liability transactions is crucial in detecting understatement of liability fraud. Proper documentation ensures transparency and accountability in recording and reporting liabilities. If there is a lack of supporting documents or if the documentation is unclear or vague, it can indicate potential fraud or manipulation in understating liabilities.