Auditing accounts payable What are the procedures available to auditors in auditing accounts payable and what level of assurance is obtained by each? Describe at least three. Which primary assertion is tested through these approaches?
When auditing accounts payable, the auditor may:
1 . Reconcile vendor statements or returned confirmations with recorded payables. This yields a higher level of assurance.
2 . Test subsequent disbursements for proper recording as a payable as of either the balance sheet date under audit or in the subsequent period, as appropriate. This yields a moderate level of assurance.
3 . Analytical review of related expense accounts to determine which accounts appear to be understated. This yields a very low level of assurance and should only be used where control risk and fraud risk are assessed as low for payables.
The primary assertion tested using the three approaches above is that of completeness.
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