Question

In: Accounting

Auditing the accounts payable balance on the balance sheet

When auditing the accounts payable balance on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion of

Select one:
a. Existence
b. Rights and obligations
c. Presentation and disclosure
d. Completeness.

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Expert Solution

 When auditing the accounts payable balance on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion of COMPLETENESS.

 In auditing the accounts payable, the completeness assertion is the most relevant because there is a high possibility of understatement of accounts payable. Through completeness only, we can know whether any omission of liabilities should be recorded .and disclosed. The understatement of accounts payable can be due to fraud or intentional acts of manipulation.

 The audit assertions for accounts payable include Existence, Valuation, Rights and obligations, completeness, presentation, and disclosure.

Completeness: Whether the accounts payable on the balance date include all accounts payable transactions that have occurred during the year

Existence: whether the accounts payable balances reported exist at the reporting date

In rights and obligations, we check whether the company actually owes the accounts payable reported.

When auditing the accounts payable balance on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion of COMPLETENESS.

Shaik sultan answered 3 years ago
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