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Dear Tutor,
There is a question which says that in the absence of the suppliers’ statements, what alternative audit procedures shall be designed to tests absent the completeness of trade payables.
Could I answer in the way that (i) the completeness of trade payables can be verified by the tests of completeness on the purchase transactions in the income statement ; and (ii) cut off test performed on the purchase transaction can serve to verify the completeness of purchase and therefore the trade payables; (iii) Check against the subsequent settlement of the trade payables; (iv) analytical review performed on the trade creditors (iv) I do not include sending confirmation to creditors as it is a test for existence, not completeness.
Would you mind advising me whether I am correct in this approach and what other procedures I have missed?
Thanks in advance for your kind help.
All your tests are fine, but I would also carry out a circularisation/confirmation. Although you would only write to suppliers you know about (and so as you say that is primarily a test of existence rather than completeness) you also have to be confident that suppliers’ balances are complete with respect of amounts owed. For example, a supplier’s invoice might not have been processed at year end and your confirmation would highlight that (and a cut-off error).
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