Which of the following audit procedures is best for identifying unrecorded trade accounts payable?
A)Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.
B)Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether receiving reports support them.
C)Examining unusual relationships between monthly accounts payable balances and recorded cash payments.
D)Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.

Question

Quizplus · Accepted Answer

By reviewing cash disbursements recorded subsequent to the balance sheet date, the auditor can identify whether any of those payments relate to trade accounts payable incurred in the prior period but not recorded until after the balance sheet date. This procedure is effective because it focuses on payments made after the balance sheet date that might relate to liabilities recorded in the prior period. The other options may also be used as audit procedures but are not as effective for identifying unrecorded trade accounts payable.

Which of the Following Audit Procedures Is Best for Identifying