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an audit risk is given contractors are required to invoice at the end of each month but often there is delay in recieving these. there is therefore risk the company will not accrue for costs resulting in incomplete liabilities and understatement of expenses
response: review invoices and payments to contractors after the year end and if they relate to work undertaken before the year end ensure they are included as accruals…
what do we mean by not accrue for costs and resulting in incomplete liabilities and understatement of expenses..explain the risk to me and in response also is is stated (ensure they are included as accruals)
please explain the risk and response
For example,
Building/Repair work is done by contractors 15 Dec. Invoice is late and not received until 10/Jan. Therefore, an accrual for the work done in Dec might be missed.
The problem could be discovered by reviewing invoices and payments received/paid after year end.
Ya! for example the year end is 31 Dec 2011 but the invoice come in Jan 2012
but the cost is for Y/A 2011(=accruals) not Y/A2012
so auditor should concern about this…
I just done this kind of question in the pilot paper Q1 is quite a good qs u may have a try
is about GRN
Besides of review invoices and payment receipts we could also flip through the date of work order or the DO (My suggestion…) Can it be? Mr Gromit??
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