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Financial Auditing Please list and describe the procedures an auditor would perform to test the fairness...

Financial Auditing

Please list and describe the procedures an auditor would perform to test the fairness of a client's accounts payable account. Please include the procedures according to the following five assertions: Existence/Occurrence; Completion; Rights/Obligation; Allocation/Valuation; and Presentation/Disclosure

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Answer #1

The process of verification of balances in accounts payable is restricted only to external confirmations, existence, completion, rights, allocation can be verified by external confirmations and disclosure should be verified with relevant accounting standards.

While going for external confirmations, the auditor can use either positive confirmations or negative confirmation. But the ideal one would be the positive confirmations because even if it is costly the auditor can be confident of the evidence obtained by doing so. In positive confirmation the creditors are required to revert back with their response even if there is no variation in the balance.

And coming to disclosure, auditor should verify it with regard to the relevant accounting standards applicable to the company.

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