A client with just-in-time inventory does not formally receive goods, but unloads supplies from the railroad car

Question:

A client with just-in-time inventory does not formally receive goods, but unloads supplies from the railroad car directly into the production line. The client has a long-term contract with the supplier specifying delivery terms, quality requirements, and penalties for noncompliance. The vendor is paid based on production achieved during the month. The auditor is concerned that is properly stated at the end of the period. How would the auditor gather evidence to satisfy him or herself that the is properly recognized for vendors that are part of the just-in-time system?

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...