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Unformatted text preview: AP5 Substantive Audit Program-Accounts Payable Balances and Unrecorded Liabilities
Assertions: Begin with the list of assertions below and add others you think appropriate. Then write your audit program to test those assertions. 1. All material liabilities are recorded. 2. All important contingencies are either provided for in the accounts or disclosed in footnotes. 3. Liabilities are properly classified as to their contingent or direct nature. 4. Liabilities are properly classified as to their current or longterm status. Program Steps: 1. Existence or occurrence Review cash disbursement journal, general ledger, and accounts payable master file for large or unusual amounts. Trace the cancelled check to the related acquisition journal entry and examine for payee name and amount. Examine cancelled check for authorized signature, proper endorsement, and cancellation by the bank. 2. Completeness Reconcile recorded cash disbursements with the cash disbursement on the bank statement. 3. Rights and obligation Review terms of purchase on invoices. 4. Valuation or allocation Examine disbursement with supporting documents to see if amounts correspond to each other. Compare classification with chart of accounts by referring to vendors' invoices and acquisition journal. Compare dates on cancelled checks with cash disbursements and bank cancellation date. 5. Presentation and disclosure Verify balances on the worksheet correspond to the general ledger. ...
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- Spring '10
- Credit card, Cheque, cash disbursement journal, allocation Examine disbursement