- March 25, 2022 at 3:50 pm #651862iyamuMember
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(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 ?March 25, 2022 at 4:05 pm #651867John MoffatKeymaster
April 8, 2022 at 11:53 am #652910Kim SmithKeymaster
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Suppose 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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