(1) Inspect after date payment if they relate to the current year and follow through the payable ledger and accrual listings .
(2) Inspect invoices after the year end to ensure to further items need to be accrued .
Sir does number 1 look relevant to audit because the focus of Auditing liability is to confirm completeness .
How does number really means ?
Ask the Tutor ACCA AA
Payables and accrual Audit
4y ago#1See this post: https://opentuition.com/topic/your-aaa-tutor-is-now-away-returning-on-8-april-before-you-post/
4y ago#2Suppose y/e is 31 Dec 2021 ...
(1) Look at payments in early Jan 2022 (in cash book) - if the related invoice is for goods/services dated BEFORE the y/e, the invoice must be included in an accrual listing if it was not posted to the payables ledger before the y/e - otherwise the liability for trade payables will be understated - i.e. COMPLETENESS assertion.
(2) Look at invoices recorded in January (in purchase ledger) - if goods/services provided BEFORE the y/e, again they should be accrued .
(2) may identify additional liabilities which are not identified by (1) - because (1) only identifies liabilities that have been settled shortly after the y/e. (2) is also testing cutoff of purchase transactions - i.e. ensuring that purchases have been recorded in the accounting period to which they relate.
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