Expenditure Cycle
Assertion Purchases Payable
Occurrence/ Existence Inspect the supporting The auditor should:
documentation (purchase Record the number of the
order, supplier delivery note, last GRN for the year (cut-
GRN and invoice) to confirm: off number)
That the (external) documents Select from the purchase
are made out to the entity and journal, material purchases
are from an approved supplier entered during the last two
All documents are correctly weeks of the year and trace
cross-referenced to each to the relevant GRN and
other. supplier delivery note (via
Each document is signed by the invoice) Inspect these
the designated authority e.g. documents to confirm that
chief buyer, receiving clerk the GRN number is lower
The goods purchased are of a than the cut-off number
type used by the company and that the documents are
inspect the cash payments dated prior to the year-end
records/bank statements to date.
confirm that the goods were Circulate external
appropriately paid for. confirmations to a sample
of both local and foreign
creditors.
Accuracy/Valuation and Confirm the mathematical agree the total of the
allocation. accuracy of the invoice by accrual and creditors
recalculating all extensions control accounts in the
(quantity x price), casts and general ledger to the trial
discounts balance reperform casts of
Agree the quantity of items the creditors control
charged on the invoice, account, and the creditors
against the quantity on the list
goods received note Identify any debit balances
Confirm prices and trade on the creditors list,
discounts used on the invoice establish the reason with
by inspection of the order or the purchases manager and
purchase contract consider whether the
Recalculate VAT, and by balances should be
inspection of the invoice, transferred to debtors
confirm that discounts are Select a sample of creditors
taken into account prior to the (which includes the
calculation of VAT company’s major suppliers)
By inspection, confirm that the from the creditors list and
VAT number and details of the obtain the year-end
supplier as well as the creditors reconciliations
supplier’s VAT number are performed by the creditors
clearly presented on the clerks
supplier tax invoice. Reperform the casts of the
reconciliation
Assertion Purchases Payable
Occurrence/ Existence Inspect the supporting The auditor should:
documentation (purchase Record the number of the
order, supplier delivery note, last GRN for the year (cut-
GRN and invoice) to confirm: off number)
That the (external) documents Select from the purchase
are made out to the entity and journal, material purchases
are from an approved supplier entered during the last two
All documents are correctly weeks of the year and trace
cross-referenced to each to the relevant GRN and
other. supplier delivery note (via
Each document is signed by the invoice) Inspect these
the designated authority e.g. documents to confirm that
chief buyer, receiving clerk the GRN number is lower
The goods purchased are of a than the cut-off number
type used by the company and that the documents are
inspect the cash payments dated prior to the year-end
records/bank statements to date.
confirm that the goods were Circulate external
appropriately paid for. confirmations to a sample
of both local and foreign
creditors.
Accuracy/Valuation and Confirm the mathematical agree the total of the
allocation. accuracy of the invoice by accrual and creditors
recalculating all extensions control accounts in the
(quantity x price), casts and general ledger to the trial
discounts balance reperform casts of
Agree the quantity of items the creditors control
charged on the invoice, account, and the creditors
against the quantity on the list
goods received note Identify any debit balances
Confirm prices and trade on the creditors list,
discounts used on the invoice establish the reason with
by inspection of the order or the purchases manager and
purchase contract consider whether the
Recalculate VAT, and by balances should be
inspection of the invoice, transferred to debtors
confirm that discounts are Select a sample of creditors
taken into account prior to the (which includes the
calculation of VAT company’s major suppliers)
By inspection, confirm that the from the creditors list and
VAT number and details of the obtain the year-end
supplier as well as the creditors reconciliations
supplier’s VAT number are performed by the creditors
clearly presented on the clerks
supplier tax invoice. Reperform the casts of the
reconciliation
