Most published accounts payable audit checklists are long and give no reason for any line, which makes them impossible to shorten safely. If you do not know what a check is for, you cannot tell whether it applies to your business, so you either do all of it or abandon the list. This page gives a checklist with the purpose attached to each item, grouped by the assertion it tests, so that dropping a line is a decision rather than a guess. It is written for a small business and it is deliberately shorter than most, because a checklist that gets completed beats one that gets started.
Completeness: four checks
After-date payments reviewed for period. Unapproved invoices at cut-off assessed for accrual. Supplier statements reconciled for your largest suppliers. Goods received but not invoiced identified. Each addresses the understatement risk from a different direction, and the first is the one to keep if you keep only one.
Existence and authorisation: five checks
A sample traced to order, receipt and approval. Approvers checked against the authority they hold. Matching exceptions reviewed for who cleared them. New suppliers reviewed. Bank detail changes reviewed. The last two are quick and address the fraud risk rather than the error risk.
Accuracy and cut-off: three checks
The ledger reconciled to the control account with differences explained. The aging reviewed for old and credit balances. Invoices around the period end checked for the right period. On the worked example on this site, $48,000 current, $21,000 at thirty days, $9,500 at sixty and $4,200 beyond is $82,700 owed, 42% of it overdue.
Questions people ask about accounts payable audit checklist
Can we use this for an internal audit?
It is written for a self-review. If you have an internal audit function the scope and documentation standards will be theirs, not ours.
How long should this take?
An afternoon for a small ledger, longer if the reconciliation does not tie. If it takes days, the finding is usually about the state of payables rather than about the checklist.
Which line finds the most?
After-date payments for errors, and the supplier list for anything worse. Those two are the highest-yield items on the list.