Figure 10.6 is a copy of the auditor’s working paper for auditing accounts payable for the client New Millennium Ecoproducts.

Required

a. Explain the nature of the test being documented in the working paper.

b. Compare the information for the current year with the details for the prior year. Do you agree with the auditor’s conclusion? Why?

Figure 10.6

Transcribed Image Text:

New Milenn ium Ecoproducts CLIENT: Period-end: 31/12/21 WaS PARTNERS N- LEADS Сигency/unit: $ 000 Reference N- Leads Step 1: Enter general information. New Millennium Ecoproducts 12/3 1/16 CLIENT Periodend: $ 000 Currency/unit | Step 2: Lead schedules. 31/12/2021 31/12/2021 31/12/2020 In % Account no Account Name Pre-ad justed Adjustments Year Inter im Prior Year Var iance TM/Ref Trade payables -8000 - 1500 20 100 -8000 TB -6500 PY 23% NOI 21 100 -1800 -1600 -200 Other payables -1800 тВ PY 13% NOI F-TOTAL -9800 -9800 -1700 TOTAL -8100 21% Step 3: Account details, ratios, and KPIS 31/12/2021 31/12/2020 360 Days – Average A/P 31 days 30 days Average Payment Period Annual Purchases of Goods and Services Expectations about account balances, ratios, and KPIS: / Due to the nature of the client's business and the stability of the primary markets in which it operates, we do notexpect the ccounts payables balance or ared itors days to vary year on year. Comments: / Account details are consistent with previous period and in line with expectations.