Because accounts payable often are subject to a high volume of activity, such reconciling entries or miscellaneous debits, or non-standard journal entries, may be difficult to detect. The auditor should consider whether the client has an established routine, or set of procedures, for processing a class of transactions on a recurring basis. Transactions outside this routine are not subject to processing in the normal course of business. Often, management will establish transaction codes for recurring transactions. Routine processing is not necessarily performed by computer systems.
Most processing involves a combination of manual and automated steps and procedures.
Transactions processed in the normal course of business generally have less risk of misstatement than other transactions. The functionality of the software and proper processing with the client data files is essential to produce credible evidence. Electronic evidence often requires extraction of the desired data by a knowledgeable auditor or a specialist. SAS No. 31, as amended by SAS No. 80, Evidential Matter , provides guidance for auditors who have been engaged to audit the financial statements of an entity that transmits, processes, maintains or accesses significant information electronically. Contains transactions that are complex or unusual in nature.