Treatment of Postdated Cheques [PDC]

In the records of the payer the amount will be shown as a deduction from the bank / cash records and a reduction of the payables figure

In the payee’s records, given that the amount has not yet been received, I imagine no record will be shown

However, in the payer’s records, if the payer is in the habit of manipulating the payables figure by recording post-dated cheques, this would seem to be a case of window-dressing and the auditors should insist that the directors treat the action as a non-adjusting subsequent event and make full disclosure in the notes to the financial statements

The question you should be asking yourself (as an auditor) is “Why is the client doing this?”

The question you should ask as the client is “Will the auditors realise what I’m doing?” !!