Payables, purchases and accruals (Internal control considerations)

Question 1

What is the audit of payables closely linked to?

Answer 1

The purchases system

Question 2

What are the controls over purchases systems based around?

Answer 2

Ensuring purchases were authorised
Segregation of duties
Matching GRNs with invoices
Prompt recortding to minimise cut-off issues

Question 3

What is a specific control often operated by clients over completeness of trade payables balances?

Answer 3

The reconciliation of month-end balances to supplier statements

Question 4

When can the auditor review these reconciliations?

Answer 4

If client has carried out this reconciliation at the year-end for all suppliers

Question 5

What if client has not carried out these reconciliations?

Answer 5

Auditor will need to compare supplier statements with year-end payables and investigate differences

Question 6

Client has not carried out these reconciliations becomes?

Answer 6

A substantive procedure that auditor must undertake