ACCA Audit and Assurance (F8) Practice Exam

What is a key objective for auditing payables?

1. Assess the efficiency of the payment process

2. Ensure PAYABLES reflect an accurate amount due

3. Evaluate the credit rating of suppliers

4. Ensure timely payments to creditors

The correct answer is: Ensure PAYABLES reflect an accurate amount due

A key objective for auditing payables is to ensure that payables reflect an accurate amount due. This involves verifying the completeness and accuracy of the liabilities recorded in the financial statements. It is crucial for financial reporting that liabilities are not understated or overstated, as this can impact a company’s financial position and results of operations. By confirming that the amounts owed to suppliers and other creditors are correctly recorded, auditors help ensure that financial statements present a true and fair view of the entity’s obligations. This accuracy is vital for stakeholders who rely on financial reporting for decision-making. While assessing the efficiency of the payment process, evaluating the credit rating of suppliers, and ensuring timely payments to creditors might all be relevant aspects of managing payables, they do not capture the central goal of an audit, which is primarily focused on the accuracy and completeness of financial information reflected in the financial statements.