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The payables ledger clerk carries out supplier statement reconciliations in which he/she compares the list of individual supplier balances with the supplier statements.
My question is: Is the supplier statement submitted by the supplier to the company?? that hey, listen, this is what you owe me?? Or is it prepared by accountant after looking at the payables’ balances?
Also what are the possible risks that could come up in the exam with regards to this reconciliation?
A selling company sends a month-end statement to all credit customers showing what they owe – like a credit card company sending out a montly statement. For the buying company, that document is the “supplier statement”.
The payables ledger clerk (of the buying company – this is your audit client) should compare this with the balance in the company’s books – the “individual supplier balance”.
If they don’t agree, the balances must be reconciled – see the solution to Activity 1 in Chapter 9 of AA in the Study Hub for a description of the possible differences. This will help you understand the risks e.g. the cut-off assertion is particularly relevant to timing differences.
I mention the Study Hub as a source of reference as I am going to be on holiday next week until 21 November, so if you can’t find help using our search function https://opentuition.com/search-opentuition, the Study Hub is worth looking into.
Hello, thank you for your response!
I truly appreciate it.
In the same question, the auditor’s response is:
Perform a review of after-date purchase invoices to determine if any relate to the current year. If any do relate to the current year, agree them to the accruals listing.
Does this mean that as auditor, we have to assess if any purchases were received by the company during the year but paid for later after the year-end. So we check the post year-end invoices and if we find that item A was paid for after year end (but delivered by supplier before year end), we strike it off the accruals list??
Is this what’s happening??
Also, I hope that you have a wonderful holiday.
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