Audit procedures for accounts payable are often listed without saying what each one proves, which makes them look interchangeable. They are not. A supplier statement reconciliation is strong evidence of completeness and says nothing about authorisation. Tracing an approval proves authorisation and says nothing about whether goods arrived. Understanding what each procedure actually establishes lets you choose a small set that covers the assertions rather than running a long list that over-tests one and ignores another. This page is the common procedures with the purpose of each stated plainly, and a note on where each is weak.
Supplier statement reconciliation: strong on completeness
Comparing the supplier's own statement with your ledger finds invoices you never recorded, which is exactly the error that is hardest to find from inside your own records. Its weakness is coverage: you only get statements from suppliers who send them.
After-date payments review: the completeness backstop
Payments made after the period end, assessed for which period they belong to. It catches what statements miss and is the procedure most likely to produce an adjustment. It says nothing about whether the amounts were authorised.
Matching and approval tracing: existence and authorisation
Following a sample of invoices to the order, the receipt and the approval. Strong on both assertions and entirely dependent on those records existing. Where they do not, the procedure degrades into asking somebody what they remember.
Questions people ask about audit procedures for accounts payable
Which procedure should we run if we only run one?
The after-date payments review, because understatement is the likeliest material error and this is the procedure that finds it.
Are supplier statements worth chasing?
For your largest suppliers, yes, and it is a reasonable annual request. For the long tail, the effort usually exceeds the value.
Do these procedures change for a small company?
The assertions do not. The extent and formality do, and materiality drives most of that, which is a judgement for your auditor rather than for us.