Substantive Test of

Accounts Payable
Accounts payable

• A primary assertion of concern is completeness

as the most likely form of misstatement is
understatement.
• A search for unrecorded liabilities and analytical
procedures performed on related expense
account balances are common procedures
for completeness.
• External confirmation procedures can also
address this assertion, if confirmations are sent
to all major suppliers irrespective of closing
balance.
Assertions, objectives and procedures for
purchases
Assertions, objectives and procedures for
Accounts Payable
Search for unrecorded liabilities

• This procedure is also sometimes called ‘the

out-of-period liability search’ or ‘the review of
subsequent payments’.
• This audit procedure is invariably included in audit
programs for substantive tests of the completeness
assertion of the accounts payable balance.
• The potential for unrecorded liabilities arises from
both errors and irregularities.
• The auditor’s objective is to obtain reasonable
assurance that material liabilities have not been
omitted.

Source:
Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett