-
+1 - 312-224-1615
Get in touch with us
-
support@helpwithassignment.com
Send us an e-mail
Solution Library
Key Assertions at Risk in Relation to Accounts Payable and Justification for each Assertion
Question
The Peak Sawmill Limited (Peak) operates a timber sawmill in a large regional town. It sources its raw material (pine logs) from a number of local growers and from its own plantations. Logs are transported on large trucks that are weighed in on the company's weighbridge and weighed out after dropping their loads in the storage area. Logs are then debarked and sawn to size in the cutting area of the mill. The various logs are then sent to other areas of the sawmill depending on what they will be used for.
You are a senior on the audit. In the planning stage of the audit, you perform analytical procedures. In the current audit period, the average number of days to pay creditors has declined significantly from the average recorded over the past three financial years.
Your investigation reveals that log suppliers represent more than 90 per cent of the value of accounts payable. As an internal control, details of the goods received notes are matched against the supplier's invoice. The accuracy of the invoice is checked, after which the invoice is authorised for payment by the mill accountant. Any discrepancy between what the supplier's invoice amount should be and the actual amount charged by the supplier is communicated to the supplier by way of a pre-numbered ‘request for credit’ form. This form provides reasons for the differences and the amount requested to be credited to the company by the supplier.
The correct amount of the invoice is entered into the accounts payable accounting system and the supplier's monthly statement is reconciled to the accounts payable balance per the creditors' ledger at month end. The differences are mostly attributable to:
• unprocessed invoices due to pricing differences
• timing differences in the recorded date of a payment made
• amounts requested for credit
• settlement discounts disallowed.
Cathy Vernon, the company's financial controller, informs you that due to the increase in the price of timber, new contracts with suppliers have been negotiated over the past year. The accounts payable personnel have complained that management is too slow in informing them about the effective dates of the implementation of the contracts and the revised prices. A brief inspection of the accounts payable reconciliations for five of the biggest suppliers indicates that many invoices are being held back due to the lack of correct pricing.
Required:
(a) List two key assertions at risk in relation to accounts payable.
(b) Provide your justification for each assertion.
(c) For each assertion, outline one substantive test of detail to obtain sufficient appropriate audit evidence.
Summary
This question belongs to accounting and discusses about key assertions at risk in relation to accounts payable and justification for each assertion based on events given in the case study.
Total word count: 926
Download Full Solution
WHAT OUR STUDENTS SAY
I was completely lost with my Thermodynamics assignment. I approached the HwA team for help and they connected me with the best chem engineering tutor ever. He not only cleared my concepts but also helped me in solving my assignments. Kudos team!
Alia Student
When I was assigned the case study analysis of integumentary system patient I had no clue as to where to reach out for help. Luckily I bumped into HwA and was astonished to find that they have specific integumentary system related section.
Hillary Smith Student
I had no clue about my Galvanic Cell assignment till I chatted with one of the chemistry experts of HwA. The expert made the concepts crystal clear to me and helped me with the assignment. I got good grades and recommended this site to my friend.
Ricky May Student
The accounting assignment due for my term end evaluation had to include data and examples from Wellington businesses. So when I mentioned this special requirement of mine to the customer care executives at TheReliableTutor they immediately paired me with an accounting assignment expert who is from Wellington and has himself studied from the Victoria University of Wellington. Needless to say I topped the class and the professor was very impressed by the quality of the assignment.
Sophie Eady Student
The prices for the assignment help at HwA are very reasonable and the quality of electric field assignment writing that I received was of a very high quality. There is never any compromise in the quality of work by the electric field assignment experts and they are extremely professional in their approach to any kind of electric field assignment questions.
Gloria Carter Student
Comments
this is a very good website
I have 50 questions for the same test your page is showing only 28
hi can you please help or guide me to answer my assignments. thanks
hi can anyone help or guide me to my assignments. thanks
This solution is perfect ...thanks
Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes
Perfect bank of solution.
great !
thanks for the quick response. the solution looks good. :)
thnx for the answer. it was perfect. just the way i wanted it.
works fine.