Assertion Evidence for Accounts Payable and Accrued Expenses Flashcards
Assertions about Classes of Transactions - Occurrence
Test a sample of vouchers for the presence of an authorized purchase order and receiving report.
Assertions about Classes of Transactions - Completeness
Trace a sample of vouchers to the purchases journal.
Assertions about Classes of Transactions - Authorization
Test a sample of purchase requisitions for proper authorization
Assertions about Classes of Transactions - Accuracy
Recompute the mathematical accuracy of a sample of vendors’ invoices
Assertions about Classes of Transactions - Cutoff
Compare dates on a sample of vouchers with the dates transactions were recorded in the purchases journal. Test transactions around year-end to determine if they are recorded in the proper period.
Assertions about Classes of Transactions - Classification
Verify classification of charges for a sample of purchases transactions.
Assertions about Account Balances - Existence
Vouch selected amounts from the accounts payable listing and schedules for accruals to voucher packers or other supporting documentation. Obtain selected vendors’ statements and reconcile to vendor accounts. Confirmation of accounts payable.
Assertions about Account Balances - Rights and obligations
Review voucher packets for presence of purchase requisition, purchase order, receiving report, and vendor invoice.
Assertions about Account Balances - Completeness
Obtain listing of accounts payable and agree total to general ledger. Search for unrecorded liabilities by inquiring of management and examining post-balance sheet transactions. Obtain selected vendors’ statements and reconcile to vendor accounts. Confirmation of selected accounts payable.
Assertions about Account Balances - Valuation and allocation
Obtain listing of accounts payable and account analysis schedules for accruals; foot listing and schedules and agree totals to general ledger. Trace selected items from the accounts payable listing to the subsidiary records and voucher packets. Review results of confirmations of selected accounts payable. Obtain selected vendors’ statements and reconcile to vendor accounts.
Assertions about Presentation and Disclosure - Occurrence and rights and obligations
Inquire about accounts payable and accrued expenses to ensure that they are properly disclosed.
Assertions about Presentation and Disclosure - Completeness
Complete financial reporting checklist to ensure that all financial statement disclosures related to accounts payable and accrued expenses have been disclosed.
Assertions about Presentation and Disclosure - Classification and understandability
Review listing of accounts payable for material debits, long-term payables, and non trade payables. Determine whether such items require separate disclosure on the balance sheet. Read footnotes to ensure that required disclosures are understandable.
Assertions about Presentation and Disclosure - Accuracy and valuation
Read footnotes and other information to ensure that the information is accurate and properly presented at the appropriate amounts.
