Audit & Assurance, Chapter 16

In this chapter, we examine the audit of payables, purchases, accruals and payroll. When auditing payrolls, the auditor must test for understatement (i.e. completeness). Rather than circularising is in payables, it is more common to obtain audit evidence from suppliers statement.

You may be asked to identify and explain audit procedures you would perform to confirm specific assertions relating to payable and accruals. For example, you may be asked for the substantive audit procedures in respect of payroll or administrative expenses.

Every type of liability covered in this chapter can form the basis of a constructed response question in the exam, either in full or in part. The audit procedures and financial statements assertions can also be tested in the form of OT questions in section A.