Comprehensive Checklist for Accounts Payable Audit

The accounts payable is a collection of bills and accounts that are owed to other businesses. These include bills made to vendors, suppliers and manufacturers that provide products and services on a regular basis. The following is a comprehensive checklist to help any business audit their accounts payable duties.

Review auditing standards for accounts payable as determined by generally accepted accounting principles (GAAP)

Obtain copies of all financial statements that are released by the end of the fiscal year, such as balance sheets, income and cash flow statements

Verify that the entries are legible, complete, accurate and timely

Check the speed, accuracy and efficiency of automated features used to create accounting entries
Check if the software meets GAAP guidelines
Verify that the software uses an automated three-way document matching system

Verify the accuracy of company’s data that was used to pay for financial transactions with third parties

Perform audit trails to match the information from accounting invoices and expense reports to checks and credit card payments

Verify that all data is recorded in the correct accounting period

Review the individuals responsible for creating, approving, paying and recording payables

Review the accuracy and efficiency of invoicing procedures
Verify that an automated software program is being used to create invoices
Check for manual entries that result in a higher number of errors
Verify that the list of recipients is accurate and updated
Verify that the invoices match the purchase orders
Review the correct procedure that must be performed when documents do not match

Review the accuracy and efficiency of purchase orders
Verify that purchase orders are completed in the correct digital or physical format

Review and/or make improvements to the work performances of your AP team of professionals for the past year

Conduct annual retraining programs for your AP team
Review the coding standards with AP processors
Discuss methods of improving weaknesses in their group and individual performances
Discuss the importance of reducing exposure to fraud
Review the punitive consequences of committing fraud
Compare the results of past audit reports with the most recent ones
Verify that AP processors are given appropriate access to the company’s data

Complete unfinished documentation of liabilities

Review strengths and weak points in AP internal controls

Review current and potential annual expense budgets

Compare the data from annual expense budgets to the actual reports

Verify the creators and recipients of these reports

Discuss the results of the audit with the management team

Update the accounts payable checklist for the upcoming audit

Perform an audit at least once a year or twice a year if a higher-than-usual number of transactions occur

Perform at least one random audit that is unannounced to employees

The audit is necessary to check an accounting department for legibility, completeness, timeliness and compliance. It’s also needed to check the employees for honesty and reliability. Most of the company’s financial data is placed in their hands, and their actions influence your success. Use the results of this audit either to reward or punish those who follow the company’s policies.

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