When performing an audit of accounts payable, ensuring the completeness assertion is crucial. Here are some procedures an auditor may adopt to check completeness:
1. Review of Purchase Requisitions and Orders: The auditor can examine the company’s purchase requisitions and purchase orders to verify that all authorized purchases have been properly recorded. This helps ensure that all liabilities related to purchases have been captured in the accounts payable.
2. Examination of Receiving Reports: The auditor can review receiving reports or goods received notes to confirm that all goods or services received have been properly recorded. This helps identify any unrecorded liabilities that may exist.
3. Vouching of Vendor Invoices: The auditor can select a sample of vendor invoices and trace them back to supporting documents such as purchase orders, receiving reports, and vendor agreements. This helps verify that all invoices received from vendors have been properly recorded in the accounts payable.
4. Confirmation of Balances: The auditor can send confirmation requests to selected vendors to verify the completeness of accounts payable. This involves requesting the vendors to confirm the amounts owed to them as of a specific date. Any discrepancies or unconfirmed balances can be further investigated.
5. Examination of Expense Accounts: The auditor can review expense accounts to identify any expenses that may not have been properly recorded as accounts payable. This includes analyzing transactions in other expense accounts that may be related to vendor payments.
6. Analysis of Cash Disbursements: The auditor can analyze cash disbursement records, such as bank statements and cancelled checks, to identify any payments made to vendors that have not been recorded as accounts payable.
By performing these procedures, the auditor can gather sufficient evidence to support the completeness assertion for accounts payable. Any discrepancies or unrecorded liabilities can be identified and appropriately addressed, ensuring that the financial statements reflect a complete and accurate representation of the company’s obligations to its vendors.
