How to Test for Completeness - Accounts Payable

by Fraser Sherman; Updated September 26, 2017
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Accounts payable are the payments a business owes to vendors for inventory, supplies or services. Testing for completeness means checking that the company records show all the accounts payable and state the amounts owed accurately; understating or omitting the amounts owed will distort the balance sheet and make a company look more profitable than it is. "Internal Auditor" magazine says tests for completeness are one of the fundamental tasks for auditors going over a company's books.

Completeness Testing

Step 1

Reconcile the accounts payable ledger with the control account summarizing the ledger. If accounts payable are complete, Southeast Missouri State University says, the two should be equal. Make sure there are cash disbursements to match any reduction in accounts payable, and every check paying off a vendor has a corresponding account. If there's a check that can't be matched to an account, it may mean the account is not on the books.

Step 2

Contact the company's major vendors. Their monthly statements should match up to what the company says it pays and owes them. If not, Cengage says the company may be understating its debts.

Step 3

Go over everything in more detail if the first tests show discrepancies. A more detailed, thorough analysis can turn up the missing information.

Step 4

Check that the company's values for accounts payable meet standard accounting procedure, Southeast Missouri says. In addition, the company should present the accounts payable balance according to standard format. Accounts payable should be listed as a current liability in the financials, and any unusual transactions should be disclosed.

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

Photo Credits

  • balance sheet image by Darko Draskovic from Fotolia.com