Question

What form, document, journal, ledger, or account does an auditor need to request from the client in order for you to pick the transactions that will make up the substantive sample for testing Accounts Payable?

Answer 1

For verification of Accounts payable, an auditor should ask the client to submit the following records ;

1) The ledger in which the entry for accounts payable is passed.

2) If the account payable is in respect of stock purchases, verify whether the stock has been recorded in the stock inward books.

3) Vouch the bills raised by the creditor.

4) Confirm with the creditor that the amount recorded in the clients books are correct. The confirmation should be in writing for better clarity if any future conflict arises.

5) Check the bank records to verify the payments made to the creditors till now and the balance are correctly recorded.

6) If the payable is staying in the balance sheet for a too long period , get explanation from the management regarding the delay in payment to the creditors.