Accounts Payable Audit Program Flashcards

A. Significance of accounts payable to businessb. Standard trade terms of industry

A. Reliance on certain suppliersb. Purchase commitments

1. Develop an expectation for accounts payable (knowledge of bus. activity, industry, historical trends2. Accounts Payable Turnover Ratio (Puch / Accts Payable) - compare to previous years and industry3. Compare actual to budget, actual to industry

Vouch accounts payable credits to supporting vouchers or receiving reports

Search for Unrecorded Liabilities:a. Examine subsequent payments after year end and supporting docs (voucher, receiving report). If obligation was before year end, trace to accounts payable listingb. Confirm zero or non-existent accounts that had high activity during the period

A. Test a sample of purchase requisitions for proper authorizationb. Review dollar limits for authorizing purchase requisitions

A. Recompute mathematical accuracy on sample of vendor invoices

Test a sample of accounts payable around year-end by examining supporting receiving reports and vouchers to determine if recorded in the proper period

Confirm accounts payable balances with suppliers

1. Agree accounts payable subsidiary to general ledger2. Search for Unrecorded Liabilities: a. Examine subsequent payments after year end and supporting docs (voucher, receiving report). If obligation was before year end, trace to accounts payable listing b. Confirm zero or non-existent accounts that had high activity during the period

Confirm accounts payable with suppliers

Test a sample of accounts payable by tracing to voucher packet (recomputate)

A. Examine financial drafts to determine that disclosures properly conform with GAAP, all necessary disclosures have been made. b. Must be classified properly, such as short-term and long-termc. Footnotes must be understandabled. Disclose accounts payable to related parties