Confirmation of Trade Payables (2)

Question 1

What do auditors use?

Answer 1

A positive confirmation, referred to as a blank or zero-balance confirmation

Question 2

What are the characteristics of this confirmation?

Answer 2

It does not state the balance owed but requires the supplier to declare the amount owed at year-end and provide a detailed statement of account

Question 3

What happens when confirmation is received back

Answer 3

Amount must be reconciled with entity’s records

Question 4

What are likely causes for differences between balance confirmed and payables ledger?

Answer 4

Goods in transit
Cash in tranist
Disputed invoices

Question 5

What should happen with any differences?

Answer 5

Should be investigated and reconciled

Question 6

How should selection and sending out of accounts payables confirmaitons be controlled

Answer 6

using the same procedures as for the receivables’ confirmation