Page 54 - eBook Audit Of Financial Statement Components

The primary relevant accounts payable and expense assertions

are:
Existence

Completeness

Cut-off

Occurrence

Of these assertions, it is believed completeness and cut-off (for

payables) and occurrence (for expenses) are usually most

important. When a company records its payables and expenses
by period-end, it is asserting that they are complete and that they

are accounted for in the right period. Additionally, the company

is implying that amounts paid are legitimate.

Audit of Trade Payable

Audit Assertion Audit Procedures
Existence Obtain an aging listing of trade payables

Occurrence balances.

Test balances and aging by comparing
amount to supplier’s invoices, statements
and creditors ledgers.

Completeness Carry out a year-end cut-off test to
determine whether purchases and
creditors balances are recorded correctly
and accurately in the proper accounting
period.

Existence Select samples of trade creditors for
confirmation and reconcile differences that
arise.

Check subsequent payments to creditors
after year end.

Classification Ensure that trade payables are disclosed in
the financial statements.

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