Lakeside Company Case 6

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The Likeside Company: Auditing Cases AUDITING PROCEDURES AND AUDITING DOCUMENTATION: TESTING THE INVENTORY PURCHASING SYSTEM Art Heyman is employed as a staff auditor with the independent accounting firm of Abernethy and Chapman. For the first two weeks of December 2012, Heyman is asined to the Lakeside Company examination. During this period, he is to perform a number of testing procedures designed by Carole Mitchell, in-charge auditor on the engagement. Heyman recalled that several parts of the initial risk brainstorming involved inventory and merchandise purchases. At the present time, Heyman is beginning to analyze the transactions that occur in the client's merchandise procurement system. Within this testing, he is especially…show more content…
This document is then forwarded to Rogers for final review. Whenever the president disagrees or questions any part of the purchase, he discusses his concern with Thomas. If they decide to make a change, the original requisition is voided a new one completed. After approval, Rogers routes one copy of the purchase requisition to the Treasurer, a second goes to the Controller, and the final copy is returned to Thomas. The original document serves as a purchase order and is mailed to Cypress. Periodically, Thomas must also special-order merchandise from Cypress. Costumer requests are often received for inventory that is not held back in the stock in the Lakeside warehouse. When Thomas receives notice that specific goods are needed, a purchase requisition is immediately prepared and forwarded to Rogers for approval. When shipments arrive at Lakeside, the members of the Inventory Department unload the merchandise and inspect each item for damage. A receiving report is prepared indicating the identity, quantity, and condition of the goods. One copy of this document goes to the Treasurer's Office, while another is routed to the Controller's Division where the inventory purchases journal is updated. Later, when the vendor invoice arrives from Cypress, a Lakeside employee stamps it so that document numbers and individual verifications can be marked directly on the form. This invoice is

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