Learning Objectives

Understand why knowledge of an entity's expense and liability recognition policies is important to the audit.

Develop an understanding of the purchasing process.

Identify the types of transactions in the purchasing process and the financial statement accounts affected.

Identify and describe the types of documents and records used in the purchasing process.

Understand the functions in the purchasing process.

Know the appropriate segregation of duties for the purchasing process.

Identify and evaluate inherent risks relevant to the purchasing process and related accounts.

Assess control risk for a purchasing process.

Identify key internal controls and develop relevant tests of controls for purchasing, cash disbursements, and purchase return transactions.

Relate the assessment of control risk to substantive testing.

Identify substantive analytical procedures used to audit accounts payable and accrued expenses.

Identify tests of details of transactions used to audit accounts payable and accrued expenses.

Identify tests of details of account balances and disclosures used to audit accounts payable and accrued expenses.

Describe how confirmations are used to obtain evidence about accounts payable.

Evaluate the audit findings and reach a final conclusion on accounts payable and accrued expenses.