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Arshg7Arshg7 asked 9 months ago


  1. The audit work of Amrut & Co is underway for the year ended 31 March 2018. Your audit manager asked you to look at the completeness of trade payables. The supplier statement balance for one of entity’s supplier PR Co showed a difference of Rs.62,000 higher than recorded in the payables ledger balance. Which of the following audit procedures should be performed in relation to the balance with PR Co to determine if the payables balance is understated?


  1. Inspect the goods received note to determine when the goods were received
  2. Inspect the purchase order to confirm it is dated before the year end
  3. Review the post year-end cashbook for evidence of payment of the invoice
  4. Send a confirmation request to PR Co to confirm the outstanding balance

Why not d Because external evidences are more reliable

1 Answers
RaviRavi Staff answered 9 months ago

question is on understatement of trade payable (any unrecorded payables)
a- take list of GRNs and match it with invoices, this will help you find out if any bills is pending and whether creditors are understated
b- focuses on whether next years’s purchase are recorded in current year it is for overstatement 
c- focuses on payment of trade payables, which are recorded in books of account, 
d- confirmation of balances outstanding (appearing in books)
d- focuses on existing recorded balances 
answer ‘a’ is appropriate 
direction of checking is important
GRN to purchase bills — completeness / whether creditors are understated 
purchase bills to GRN — Existence / whether creditors are real 

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