Page 53 - eBook Audit Of Financial Statement Components

Such operating items are classified as current liabilities even if

they are due to be settled after more than twelve months from
the balance sheet date.

Other current liabilities are not settled as part of the current

operating cycle but are due for settlement within twelve months
of the balance sheet date.

Examples are the current portion of interest-bearing liabilities,

bank overdrafts, dividends payable, income taxes and other non-
trade payables. Interest-bearing liabilities that provide the

finance for working capital on a long-term basis, and are not due

for settlement within twelve months, are non-current liabilities.

The primary risks 4.1 Developing the Audit Plan
for accounts payable
and expenses are: The auditor should check the adequacy of cut-off procedures

adopted by the entity in relation to transactions affecting the
Accounts payable creditor accounts. For example, the auditor may examine the
and expenses are
intentionally documents relating to receipt of goods from suppliers during a
understated
few days immediately before the year-end and verify that the
Payments are made
to inappropriate related invoices have been recorded as purchases of the current
vendors
year.
Duplicate payments
are made to vendors
Keep these in mind The auditor should check that the total of the creditors' balances
as you audit
accounts payable. agrees with the related control account, if any; the difference, if

any, should be examined.

The auditor should examine the correspondence and other

relevant documentary evidence to satisfy himself about the
validity, accuracy and completeness of creditors.

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