AUDIT PROGRAM AUDIT PROGRAM Accounts Payable Accounts Payable Assertion
Assertion Objective Objective ProceduresProcedures Valuation or Valuation or Allocation Allocation To determine if the To determine if the amounts recorded for amounts recorded for accounts payable have accounts payable have been recorded
been recorded correctly. correctly.
Enter fictitiEnter fictitious payous payables into ables into the sythe system. stem. Process Process it using it using thethe
clients system and compare the result with the
clients system and compare the result with the expected output.expected output.
Obtain a Obtain a listing of listing of accounts accounts payable, foot payable, foot the listing, the listing, and agreeand agree
it to the general ledger control account. it to the general ledger control account.
Trace Trace selected vselected vouchers ouchers or vor vendor accounts endor accounts to the to the supportingsupporting
documents or subsidiary accounts payable records to verify the documents or subsidiary accounts payable records to verify the accuracy of the details.
accuracy of the details.
Obtain copies of vendors’ monthly statements and reconcile theObtain copies of vendors’ monthly statements and reconcile the
amounts to the client’s accounts payable records. amounts to the client’s accounts payable records.
Reconcile Reconcile the daily the daily cash disbcash disbursements wursements with posting ith posting to theto the
accounts payable subsidiary records. accounts payable subsidiary records. Completeness
Completeness To To determine determine if if allall transactions affecting transactions affecting accounts payable that accounts payable that should have been should have been recorded are recorded. recorded are recorded.
Ask Ask management management about about control control activities activities used to used to identifyidentify
unrecorded payables. unrecorded payables.
Confirm Confirm vendor acvendor accounts, counts, including accincluding accounts ounts with smwith small or all or zerozero
balances. balances.
Vouch Vouch large large monetary monetary items items from from the the purchases purchases journal journal andand
cash disbursements journal for a limited time
cash disbursements journal for a limited time after year-end.after year-end.
Examine Examine the the files ofiles of unmatcf unmatched purched purchase hase orders, orders, receivingreceiving
reports, and vendor invoices for any
reports, and vendor invoices for any unrecorded payables.unrecorded payables.
Examine Examine and and testtest the client’s procedures forthe client’s procedures for reviewing vendorreviewing vendor
payments lists. payments lists. Cut-off
Cut-off To To determine determine if if allall transactions affecting transactions affecting accounts payable have accounts payable have been recorded in the been recorded in the correct accounting correct accounting period.
period.
Compare Compare the date the date on recon receiving report eiving report with the with the date on date on thethe
vendor’s invoice. vendor’s invoice.
Compare Compare the date the date of the of the invoice winvoice with the ith the date they date they werewere
recorded in the accounts payable journal. recorded in the accounts payable journal.
Tracing Tracing dated rdated receiving eceiving reports reports to voucto voucher reher register gister entries andentries and
vouch recorded entries to supporting documentation. vouch recorded entries to supporting documentation.
AUDIT PROGRAM Cash
Assertion Objective Procedures
Valuation or Allocation
To determine if the amounts recorded for cash have been recorded correctly.
Reconcile the total of electronic cash disbursements transfer
and the checks issued each day with the daily cash disbursements report.
Foot the total of the cash disbursements journal and verify if it
agrees with the underlying accounting records and the general ledger control account balance.
Perform a bank reconciliation and account for any differences. Review the reconciliation of payment transfers with postings to
the cash disbursements journal and accounts payable subsidiary records.
Enter fictitious disbursements of cash into the system. Click
“Pay money to Supplier” button. Enter the details. Process it using the clients system. Go to “Reports” and examine if the dummy transactions are reflected in correct amount.
Completeness To determine if all disbursements of cash are recorded.
Examine the sequence of checks in the check register. Ask management about control activities used to identify
unrecorded disbursements.
Vouch large monetary items from the purchases journal and
cash disbursements journal.
Examine and test the client’s procedures for reviewing vendor
payments lists. Existence or Occurrence To determine if recorded cash disbursements have occurred.
Examine outstanding checks list to determine that checks are
being processed promptly.
Examine if check issuances contain valid signatures. Perform a cash count for cash on hand.
AUDIT PROGRAM Purchases
Assertion Objective Procedures
Occurrence To determine if
purchases recorded by the entity have
occurred.
The quantity and quality of goods and services received is
documented and agrees with the requisition and performance expectations such as service level a greements, contract terms, and vendor performance.
Observe and evaluate proper segregation of duties.
Test a sample of vouchers for the presence of an authorized
purchase order and receiving report.
Examine paid vouchers and supporting documents for
indication of cancellation. Completeness To determine if all
purchases are recorded.
Create dummy purchases. Click “New Purchase Order” a nd
enter the details. Click “Convert to Purchase Invoice” then “Update”. Look into the “Purchase Invoices” if th e purchases are recorded and updated.
Review procedures for accounting for numerical sequence of
purchase orders, receiving reports and vouchers.
Trace a sample of receiving reports to their vendor invoices and
vouchers.
Trace a sample of vouchers to the purchases journal.
Valuation or Allocation
To determine if the amounts recorded for purchases have been recorded correctly.
Recompute the mathematical accuracy of vendor invoice. Agree information in the sample of vouchers for product,
quantity and price.
Examine reconciliation of vouchers to daily accounts payable
report.
Enter fictitious purchases into the system. Process it using the
clients system and compare the result on the “Reports” with the expected output.
AUDIT PROGRAM Purchase Discounts
Assertion Objective Procedures
Rights and Obligation To determine if the entity has the right over the purchase discount.
Examine vendor’s invoices for terms of
the purchase, including the discount rate and the discount period.
Valuation or Allocation To determine if purchase discounts are recorded in the correct amount.
Enter dummy purchases with discounts
and examine if the discounts are stated in the correct amount.
Recompute the mathematical accuracy
of discounts granted by the vendor.
Agree information in the sample of
vouchers for product, quantity and price. Completeness To determine if all purchase discounts
are recorded.
Obtain a sample of invoices and
vouchers, and trace to the purchases journal if discounts are recorded.
Trace a sample of receiving reports to
AUDIT PROGRAM
Purchase Returns and Allowances
Assertion Objective Procedures
Valuation or Allocation To determine if purchase returns and allowances are recorded in the correct amount.
Review the quantity and prices of goods
returned to vendors.
Recompute the mathematical accuracy
of allowances and adjustments to purchases.
Examine reconciliation of vouchers to
daily accounts payable report. Completeness To determine if all purchase returns
and allowances are recorded.
Review the use and authorization of
debit memoranda for purchase returns and allowances.
Examine the accounts payable journal if
the returns and allowances are reflected.
Create fictitious returns and allowances
and look into the reports if the returns and allowances are updated.
Existence or Occurrence To determine if purchases recorded by the entity have occurred.
Observe and evaluate proper
segregation of duties.
Examine vouchers and supporting