AC410 Unit7 Discussion - Timing Issues in Accounts Payable...

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Timing Issues in Accounts Payable Audits As you know, companies cannot possibly pay their debts by the last day of the fiscal year. You will discuss how auditors treat the timing issues encountered in accounts payable audits. As part of the audit process, auditors like to try to get as much work as possible done before the balance sheet date. This is possible with several accounts due to their nature and the extent of the testing done. However, the accounts payable audit is performed after the balance sheet date. What are some of the reasons that accounts payable testing should not be performed until after the company year end? What are the specific timing issues that come into play when the auditor tries to determine the true value of accounts payable? Why are audit confirmations so critical in valuing accounts payable? Respond per your Syllabus guidelines.
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Unformatted text preview: Due to the volaTle nature of accounts payable things can change immensely in a short amount of Tme. ±herefore waiTng to test unTl the year end oFers the most stable look at of the data. ±his helps limit any errors that may get listed because certain items may not have cleared yet. ±his volaTle nature also makes true value a bit more di²cult to determine. ±he true value should be determined as closely to the balance sheet date as possible. ±his again helps limit any errors because there is less Tme for changes. Audit con³rmaTons help to verify that all liabiliTes have in fact been accounted for. ±his helps negate any material misstatements that may have happened over the course of Tme. Whittington, O. R., & Pany, K. (2014). Principles of auditing & other assurance services (19th ed.). New York, NY: McGraw-Hill....
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  • Spring '14
  • Financial audit, External auditor, balance sheet date

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