BDO ZIMBABWE

Audit programme

CREDITORS N1

Company……………………………………………………………

Year end…………………………………………………………….

The objective in this programme is to test creditors for understatement. The programme is meant to
serve as a guide and each auditor applying it is expected to use his/her own professional judgment
and initiative in preparing additional programmes that may be necessary to achieve the broad
objective. Creditors are usually understated as a result of the following reasons:

 Unauthorised stock purchases made or overhead expenses incurred.

 Un-invoiced deliveries from suppliers.
 Purchases misclassified or not recognised; trade creditors not recorded.
 Purchases recorded at wrong amounts.
 Purchases recorded in wrong period, e.g to smooth earnings.
 Debit notes issued for returns not made or allowances not earned.
 Purchases suppressed to improve apparent working capital.
 Purchase invoices recorded but goods not received or services not rendered at all or
until following period.
 Purchases understated to (1) Improve performance picture or (2) increase profit
sharing.
 Returns or other allowances received misclassified or not recorded.
 Purchases recorded at more than liability; paid in full and difference
misappropriated.
 Accruals not made for leave, pensions and other contingent liabilities
 Computations for provisions made using wrong parameters.

Therefore, the following procedures are designed to address the above issues:

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BDO ZIMBABWE
Audit programme

CREDITORS N1-1

Company……………………………………………………………

Year end…………………………………………………………….

CURRENT
DESCRIPTION Preliminary Adjustments Final PRIOR

Trade creditors

Other creditors

Accruals

Provisions

TOTAL

Performed Reference to
Audit Steps by working paper(s) Symbol
1. Obtain a list of year end creditors and
1.1 Review and obtain explanations for
major fluctuations with prior year and
any unusual balances
1.2 Review the reconciliation with control
account in the general ledger
1.3 Agree creditors balances per listing to
creditors’ statements.
Check reconciliations where different

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BDO ZIMBABWE
Audit programme

CREDITORS N1-2

Company……………………………………………………………

Year end…………………………………………………………….

Performed Reference to
by working paper(s) Symbol
1.4 Trace major suppliers examined
under Expenses and Inventory
sections to the list
1.5 Ensure group company balances are
separately disclosed
1.6 Review debit balances and where
material, reclassify to debtors
2. Check accruals by examining
documentation or checking calculations
ensuring provisions are made for such
items as leave pay, bonuses etc
3 Conduct a search for unrecorded liabilities
by:
3.1 Examining subsequent cash
disbursements records up to…………
3.2 Examining purchase records up
to….......................................................
3.3 Examining unprocessed invoices
at……………………………………...
3.4 Examining receiving records
immediately prior to year end
3.5 Checking major creditors from prior
year working papers
4. CUT OFF
4.1 Select purchase invoices before and
after cut off and trace them to
underlying proof of receipt to ensure
that goods/services were received and
recorded in the same accounting
period.
4.2 Select goods received vouchers
before and after cut off and match
them to the suppliers’ invoices to
ascertain that goods or services have
been recorded in the same accounting
period in which they were received

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BDO ZIMBABWE
Audit programme

CREDITORS N1-3

Company……………………………………………………………

Year end…………………………………………………………….

Performed Reference to
by working paper(s) Symbol
4.3 Check that the suppliers’ credit notes
for goods returned before and after
the cut-off have been recorded in the
same period as the goods were
returned

5 Enquire of a senior official as to:

5.1 Omitted liabilities
5.2 Contingent liabilities
5.3 Capital commitments (Cross reference
to PPE)

6 Agree closing balances with the general

ledger

7 Agree prior year figures with working

papers

8 Make note of report items

9 Have you satisfied yourself through the work performed that the following audit
objectives have been met:
Completeness : Recorded creditors represent all amount s owed in this and prior
periods not yet paid by the company
Existence: Recorded creditors are appropriately recorded by amount and
account in the underlying financial records
Valuation: Appropriate adjustments are made to recorded creditors for
amounts which are no longer expected to be payable and for
changes in foreign currency exchange rates
Presentation: Creditors are properly classified, described and disclosed in
accordance with the applicable accounting principles and legal
requirements.

CONCLUSION
Based on work done, creditors are not materially understated
Prepared by: ……………………………………. Date: ………………………………..

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BDO ZIMBABWE
Audit programme

Reviewed by: …………………………………... Date: ……………………………….

ACCRUALS AND N2
PROVISIONS

Company……………………………………………………………

Year end…………………………………………………………….

Current
ACCOUNT Preliminary Adjustments Final Prior

ACCRUALS

Audit fees
Bonuses
Leave pay – salaries
Leave pay - wages
PAYE
Rent
VAT
Pension
NSSA
Electricity

Total accruals

PROVISIONS

Total provisions

Consider preparing a “carry forward” working paper describing the nature and purpose of any
unusual accrual or provision accounts which the company uses regularly.

The above items are examined in accordance with the programme on N2-2

Prepared by: ……………………………………. Date: ………………………………..

Reviewed by: …………………………………... Date: ……………………………….

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BDO ZIMBABWE
Audit programme

ACCRUALS AND N2-1

PROVISIONS

Company……………………………………………………………

Year end…………………………………………………………….

PERFORMED BY REFERENCE
1. Agree balances with general ledger

2. Investigate and explain significant differences between

current and prior year amounts and record explanations in
the working papers.
Compare also with earlier years if appropriate.

3. Review for omitted accruals by examining accounts listed

on N2-1 where accruals were not made for income statement
expenses which may give rise to an accrual

4. Select significant accounts and check by:

- Examining subsequent payment or
- Examining documentation or
- Testing calculations

5. Examine leave pay provision

5.1 Select 2-5 persons and check days accrued, rates and
Calculation
5.2 Compare numbers of staff on leave pay list with recent
Payroll
5.3 Ensure maximum leave accrual has not been exceeded
particularly for accounting staff.

6 Check debit balances on provisions

CONCLUSION
Based on our examination of accruals and provisions:
 Accruals and provisions are adequate but not excessive
 The basis of calculation is consistent

Prepared by: ……………………………………. Date: ………………………………..

Reviewed by: …………………………………... Date: ……………………………….