ACCOUNTS PAYABLES AUDIT WORK PROGRAM

PROJECT TEAM (LIST MEMBERS)

Project Timing Date Comments

Planning

Fieldwork

Report Issuance (Local)

Report Issuance (Worldwide)

AUDIT OBJECTIVES

Objective Comments Initial

• Ensure that controls around the

payables process are designed and
operating properly.

• Ensure that proper segregation of

duties exists.

Time Audit Step Initial WP Ref

Administration

Planning

• Discuss the nature and scope of the audit with key ABC
personnel.

• Discuss timing with key management.

• Schedule timing with the auditee.

• Finalize audit programs.

• Schedule staffing as appropriate.

Reporting

• Create a summary scorecard for each process reviewed.

• Using the standard report template, create the internal audit

report (including a compilation of findings resulting from the
work performed).

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• Hold a closing meeting with key company management to

review draft internal audit reports and findings.

• Publish the final report and distribute it.

Other Administrative

• Compile test work and key support data into a work paper
binder. Include a binder index of key information.

• Include a final budget vs. actual (BVA) summary for the job in
the work paper binder.

• Include a copy of the final report in the work paper binder.

• Discuss job economics with the internal audit manager, as

necessary.

• Follow up on satisfaction surveys.

• Submit the report to the internal audit report database.

• File work papers in the internal audit file room.

Preliminary Field Work

• Identify key contacts for audit areas.

• Obtain and document an understanding of the overall operating

organization structure. Consider the following areas:
− Personnel: Organization charts, total number of personnel,
divisions, job descriptions, etc.
− Transactions: The volume/value of various transaction
types processed.
− Systems: Application modules, interfaces, tracking systems
and related management reporting.
− “Customers”: Who are the key external and internal
customers for the process?

• Obtain electronic copies of relevant files as considered

necessary to facilitate testing and process analysis.

Detailed Audit Procedures

Understand the Process

• Conduct interviews with key accounts payable individuals to

gain an understanding of the process.

• Create process maps to visualize the flow of information and to

identify key points of control and risk.

• Review relevant written departmental policies and

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procedures/goals and objectives, including all policies.

• Evaluate current practices against known best practices.

• Interview key management in the accounts payable department

to gain an understanding of the workflow within each area.
Document the discussion.

Detail Testing

Accounts Payable Review Work Program

• Planning meeting – Audit Team
− Conduct a planning meeting to discuss the scope, approach
and timing.
− Determine the appropriate auditee contact.

• Obtain sufficient understanding of the audit area:

− Determine if an internal audit of this area has been done
previously. Utilize any previous work products for training
and development of the current plan.
− Obtain and review the policies and procedures for AP.
− Use self-assessment material, if appropriate, to have the
auditee evaluate their control environment prior to the audit.

• Work with the auditee on the scope, approach and timing of the
audit and detailed document request.

• Review any known best practices for the accounts payable

process area and incorporate them into the audit work and
audit report, if appropriate.

Fieldwork
• Conduct an entrance meeting to reestablish the scope and
timing of the review. Establish a schedule for status meetings
and open-communication protocols.

• Obtain the following:

− Organizational chart for purchasing and AP
− Policies and procedures for AP, including vendor master file
setup and maintenance, invoice entry, expense
reimbursement, and payment
− Policies and procedures for purchasing, including pricing
and approval (negotiating and updates)
− Signature authorization list – checks and invoice approval
− AP aging
− AP-detailed trial balance
− AP check registers
− Electronic downloads of vendor master files

• Gain an understanding of procedures for payment processing:

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invoices, expense reimbursements, petty cash and imprest

accounts.

• Observe and document (via flowcharts) the processing of

payments. Consider the following points as a guide:
− Are systems surrounding AP integrated? Review current
systems used, including AP, purchasing and receiving.
− Determine how purchases are priced, how often prices are
monitored for changes, and how freight and sales and use
tax is accounted for
− Determine the process for PO and non-PO invoices.
− Determine what controls (manual and system) are in place
to avoid duplicate payments.
− Perform vendor setup and maintenance procedures,
including obtaining tax ID numbers for XXX purposes.
− Determine the process for identifying and applying credits.
− Determine if internal controls are in place throughout the
process.
− Determine if proper segregation of duties exists.
− Determine if payments are properly authorized.
− Determine if invoices are properly authorized and approved
on a timely basis and are matched with the proper PO.
− Determine if check stocks are appropriately secured.

• Process map the accounts payable process, including

purchasing and receiving to the extent that they impact
accounts payable.

• Sample (XX) petty cash voucher requests to determine the

following:
− Are receipts attached with the request?
− Is the request properly authorized per internal policy (verify
the signature)?

• Sample (XX) invoices paid by manual checks and (XX) invoices

paid by system-generated checks/payment vouchers to
determine the following:
− Ensure that payments are properly authorized per internal
policy (verify the signature).
− Ensure that proper backup is attached to the voucher.
− Ensure that the appropriate number of signatures are
present on checks over certain limits.
− Ensure that taxes are appropriately paid.

• Sample (XX) expense reports to determine the following:

− Payment properly authorized per internal policy
− Receipts attached with the request
− Expense report coded for GL and department code

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• Determine whether monthly vendor statements are kept on file.

If so, select (XX) credits and determine whether they have
been researched and applied appropriately and in accordance
with company policy.

• Review the aging report for credit memos and inquire about
unusual items. Obtain an electronic download and stratify it to
identify recurring vendors or other trends.

• Select (XX) purchase contracts and ensure that the prices in

the system are current.

• Obtain and review a recent bank statement and reconciliation.

Inquire about old outstanding items and unusual items.
Determine the procedure for reporting unclaimed property.

• Review the AP aging for unusual items and timeliness. Test as

needed.

• From the electronic vendor master file, determine if duplicate

vendors are in the system.

Final
• Reporting: Draft
− Prepare a preliminary draft of the audit report using the
standard format. Ensure that the appropriate auditee
reviews the draft and that any action items have been
discussed with the auditee.

• Reporting: Issuing draft

− Issue a preliminary report to management. At this point,
management/auditee should agree upon the timing for
implementing any action items identified and agreed upon in
the report. Responsibility for implementation should also be
assigned.
− Validate the accuracy of all audit report content.

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