Auditor Procedures to Test Payables Balance (2)

Question 1

What do substantive procedures focus on?

Answer 1

The auditor performing detailed procedures on the numbers in FSs

Source documentation => FSs

Question 2

What do detailed procedures include

Answer 2

Analytical procedures
Enquiry and confirmation directly from a third party – ie inquiry
Inspection of records and assets
Observation
recalcUlation and reperformance

Question 3

Analytical procedures performed?

Answer 3

On amounts owed to major suppliers at year end compared to prior period

Question 4

Enquire from management?

Answer 4

The reasons for any significant differences

Question 5

Inspect?

Answer 5

The cash book payments in post year end period for any significant payments to suppliers to ensure uear-end liability is accurately recorded

Question 6

Calculate?

Answer 6

The payables payment ratio and compare to prior period. Discuss significant differences with management

Question 7

When is the balance complete?

Answer 7

Depends on the level of errors in the sample (e.g. the monetary value of any errors)