Which of the following audit procedures is best for identifying unrecorded trade accounts payable?
A. Examining unusual relationships between monthly accounts payable balances and recorded cash payments B. Reconciling vendors statements to the file of receiving reports to identify items received just prior to the balance sheet date C. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period D. Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports
The best audit procedure for the identification of unrecorded trade accounts payable is the option C. The best thing to do, is to review the cash disbursements that are recorded subsequent to the balance sheet date. This is done in order to determine whether the related payables apply to the prior period.
This is a concept in Finance, which is a very vast field and a sub-field of Business studies. Finance deals with the management of cash, and its flows in and out of an organization for various business purposes. Usually, finance majors are taught together with Accounting named as an Accounting and Finance course in many colleges.