Page 30 - eBook Audit Of Financial Statement Components

The types of This section discusses the substantive procedures for payables

substantive arising from purchase transactions. The types of substantive

procedures
procedures are:
are:
(a) Analytical procedures;
- Analytical

procedures; (b) Test of details of transactions, and
(c) Test of details of balances.
- Test of

details of
Prior to performing the above procedures, auditors should perform
transactions,

and initial procedures such as tracing the opening balance for the
current period to the audited balance of previous year’s working
- Test of
papers.
details of

balances.
A listing for all payable balances is obtained from the client and the

amounts are reconciled to ledgers. Auditors should also review

them for any unusual entries. Then, auditors should perform the

following procedures on the listing of all account payables:
(a) Recalculation-auditor should add the listing and compare

the total with the amount in the ledger.

(b) Compare a sample of supplier's details and balances

between the listing and the subsidiary ledger.

ANALYTICAL PROCEDURES

Analytical procedures are planned to confirm expectations, and
performed in four stages:

i. To review the understanding of the entity as to whether any
changes to payable balances are to be expected;

ii. To determine any fluctuations in amount of purchases and

payable balances between this year and the previous year.

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