AUDIT PROGRAMME

TRADE PAYABLES

Name of Client Sheridan AV

Year-end

Name of Auditor (s)

Trade payables are the amounts the company owes its suppliers for the provision of goods
and services. Trade payables are shown as current liabilities. . Substantive testing should be
carried out at year end on the Statement of Financial Position to gain evidence regarding the
following assertions:

 Presentation and disclosure

 Accuracy classification and valuation
 Rights and Obligations
 Completeness and cut off
 Existence or Occurrence

The following substantive tests were carried out on the trade payables showing on the
Statement of Financial Position (see attached)

Audit Assertion Audit objective Test(s) to be carried out Details of testing Date and
signature
Presentation Trade payables Perform analytical
and Disclosure are properly procedures:
identified and Calculate ratios
classified in the Analyse ratio results
financial
statements
Check opening balances
Disclosures to previous years
relating to trade accounts to ensure
payables are properly brought forward
adequate
Obtain a list of trade
payables balances.
Check a sample to
underlying records.
Test the list adds up.
Agree the list to the
control account and to
the financial statements
 Compare statement
presentation with
applicable accounting
standards to determine
that trade payables are
properly identified and
classified in financial
statements

Determine
appropriateness of any
disclosures relating to
trade payables

Accuracy, Trade payables Vouch a sample of trade

classification are stated at payables to supporting
and valuation correct amount documentation as
owed follows:

Vouch from list of trade

payables to suppliers’
Rights and invoices, goods received
Obligations Trade payables notes and purchase
are liabilities of orders or other
the entity at the supporting
date of the documentation to ensure
Statement of recorded at correct
Financial Position amount owed.

Completeness Trade payables Perform a search for

and Cut off include all unrecorded liabilities by:
amounts owed by
the entity to Analytical review
suppliers of goods
and services at Discussion with
the Statement of management on steps
Financial Position they have taken to
date ascertain all liabilities
recorded
All trade payables
are recorded in Select a sample of
the correct recorded purchase
accounting period transactions from several
days before and after
year-end and examine
supporting suppliers
invoices and goods
received notes to
determine that
 purchases were recorded
in the correct period

Observe the number of

the last goods received
note issued on the last
business day of the audit
period and trace a
sample of lower and
higher numbered goods
received notes to related
purchase documents to
determine whether
transactions were
recorded in the proper
period

Identify any amounts on

ageing report that are
overdue their invoiced
terms and investigate any
reasons with Sheridan
AV. Enquire if there are
any late payment
charges.

Existence or Recorded trade Perform a payables

Occurrence payables circularisation if
represent amount necessary (see attached
owed by the sheet)
entity at the date
of the financial
statements

From the audit work carried out I confirm that (*subject to the matters highlighted below)
in my opinion, trade payables are fairly stated.

Signed
Auditor

* Delete or expand as necessary

HOW TO CARRY OUT A TRADE PAYABLES CIRCULARISATION

1 Select a sample of accounts for confirmation from a complete list of suppliers

2 Confirm with client the payables you wish to circularise. Obtain explanations
where the client does not want you to circularise.

3 Send the confirmation requests. Enclose a prepaid envelope for return to the
firm. Ensure that the reply part of the letter is properly referenced.

4 Record replies on a control sheet

5 Where replies are not received within a reasonable period send a follow-up letter

6 Follow alternative procedures for any accounts which have an unfavourable

response or for which no response has been obtained.

7 Summarise the results and consider whether audit evidence has been obtained
for trade payables.