Substantive Procedures for Liabilities
Auditing Accounts Payable and Other Liabilities
The greatest risk for liabilities is understatement. Auditors search for obligations that should have been recorded but were omitted from the financial statements.
Note
Reviewing payments made after year-end is one of the most effective procedures for identifying unrecorded liabilities.
Summary
Liability audits primarily focus on ensuring that all obligations have been completely recorded.