BACS payments within an audit

BACS payments within an audit

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When preparing the audit how do you deal with BACS payments that have been initiated but not yet processed. For example payments set up by the company today, the year end is in 2 days with the payment date for the BACS payment in 7 days, ie in the next financial period. Do you simply treat the payments as you would an issues but not presented cheque?
Mike Leng

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By Georgina Rollings
28th Aug 2003 09:48

Be consistent
Sorry to give exactly the opposite answer, but in my view you should treat all such payments the same way irregardless of size. If the BACS payment has been initiated prior to the period end, then I would treat it like a cheque that has been issued but not cleared. Presumably you don't get many of them?

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By tom123
28th Aug 2003 08:36

Consider Materiality
If the amount of the payment is relatively small, then I would show the payment as having been made, and the liability for the payment as less, eg no net wages outstanding.

If the payment is large, relative to your turnover, then I would consider it as not having been made at the year end date. Your bank balance will be greater, not showing the payment, and so will your corresponding liability, be that to suppliers, employees or whatever

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By neileg
28th Aug 2003 10:59

I have a different opposite to Georgina
I would argue that you should treat the payments consistently, but that any BACS batch not processed by the year end should be treated as not having been paid. I see the situation as being similar to a cheque have been drawn but not put in the post at the year end.

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By AnonymousUser
28th Aug 2003 16:45

I agree with Neil
There is enough control over BACS to know exactly when the bills or employees are being paid. Payments can be turned around in 3 working days (including the day of processing) so any payments which the directors wished to be made before the year end could have been done so. The other argument doesn't work - you could forward date a payment for 3 months in advance - should that be included as an o/s item? I don't think so.

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