Audit Program for Accounts Payable

Accounts Payable should also be properly taken care of to ensure that they actually exist. The audit program for payables are shown below:

Audit Objectives:

To determine that all existing liabilities are properly recorded and shown in the balance sheet
To determine that all the recorded liabilities are existing liabilities of the agency as of balance sheet date
To determine that payees are valid claimants
To ascertain that transactions are duly approved and complete with supporting documents

Test of details of transactions and balances:

1. Vouch recorded accounts payable transactions to supporting documentation.
2. Vouch credits to supporting vouchers, vendor invoices, receiving reports, and purchase orders and other supporting information.
3. Vouch debits to cash disbursements or purchase returns memoranda.

4. Perform purchases cut-off test.
Select sample of recorded purchase transactions from several days before and after year-end and examine supporting vouchers, invoices, etc. to determine that purchases were recorded in the proper period.

Observe the number of the last receiving report issued on the last business day of the audit period and trace sample of lower- and higher-numbered receiving reports to related purchase documents and determine that transactions were recorded in the proper period.

Perform cash disbursements cut-off.
Observe the number of last check issued and trace to the accounting records to verify accuracy of cut-off, or trace dates of paid checks returned with year-end cut-off bank statements to dates recorded.

Confirm accounts payable. On a sample basis, send confirmation requests to vendors with large balances. Investigate and reconcile differences.

Determine that payables are properly identified and classified.