Audit and Accounting > Accounts Payable

Accounts Payable or Purchase Ledger may have less audit significance, as suppliers will normally raise any problems. However, it is often important to establish that liabilities are not being understated or suppressed.

Many tests relate to supplier master file details, which often in a file separate from the detailed ledger items.

The following are commonly-used tests (grouped by type).

Analysis

  • Reconcile check register to disbursements by vendor invoice
  • Select and report details of various types of account and compare with turnover
  • Summarise invoices by supplier to prove individual balances
  • Create an activity summary for suppliers with duplicate products
  • Generate cash requirements by bank, period, product, vendor, etc.
  • Isolate vendor unit price variances by product
  • Create activity summary by supplier
  • Reconcile check register to disbursements by vendor invoice
  • Total posted invoices for the year for accurate vendor rebates
  • Evaluate purchasing contract compliance

Calculations

  • Cast (total) the file. It is often best to separate debit and credit balances (use field statistics option)
  • Identify vendor unit price variances by product over time
  • Calculate cash requirements by bank, period, product, vendor, etc.
  • Isolate vendor unit price variances by product
  • Calculate days in accounts payable and average days for invoices to be paid

Exception Tests

  • Identify debit balances
  • Identifying unusual standing data
  • Identify old invoices
  • Identify invoices with missing order numbers
  • Test for items with dates or references out of range (cut-off)
  • Identify and total liabilities for goods received and not yet invoiced
  • Extract total posted invoices for the year for accurate vendor rebates
  • Find invoices without purchase orders
  • Identify cash/lost discounts not taken
  • Extract total posted invoices for the year for accurate vendor rebates
  • Extract invoices posted with duplicate purchase order numbers

Gaps and Duplicates

  • Test for duplicate payments/invoices
  • Test for duplicate bank account details
  • Test for duplicate purchase numbers
  • Identify duplicate invoice payments or freight and tax charges
  • Identify invoices posted with duplicate purchase order numbers
  • Create an activity summary for suppliers with duplicate products

Matching and Comparing

  • Match subsequent period payments against period and balances to identify unmatched payments
  • Compare supplier Price Lists to Electronic Data Interchange invoice charges to ensure billings are in accordance with agreements
  • Compare the master file at two dates to identify new suppliers
  • Compare voucher or invoices posted against purchase order amounts
  • Find distributions to account/suppliers not in suppliers' account ledgers
  • Compare supplier names, addresses, etc. to those of employees
  • Compare recurring monthly expenses to paid invoices
  • Compare vendor payables posted to purchase orders
  • Correlate vouchers or invoices posted versus purchase order amounts
  • Check vendor addresses against mail address lists

Sampling

Most sampling options apply.