Auditing and Assurance Services, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134075754
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 13, Problem 26DQP
a.
To determine
Identify and indicate the transaction related audit objectives for each of the internal control.
b.
To determine
Identify and list the test of control that is to be performed for testing the effectiveness of each control.
c.
To determine
Identify and list the substantive test that is to be performed for determining the fairness of the financial statements for each control.
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The following internal controls for the acquisition and payment cycle were selected from a standard internal control questionnaire.1. Approved purchase orders are required for all acquisitions of goods.2. Prenumbered receiving reports are prepared as support for acquisitions and numeri-cally accounted for.3. Dates on receiving reports are compared with vendors’ invoices before entry into theacquisitions journal.4. Account classifications are reviewed by someone other than the preparer.5. All supporting documents are cancelled after checks are signed or electronic fundstransfers are approved.6. The authorized signer compares data on supporting documents with checks and elec-tronic funds transfer authorizations.7. Vendors’ invoices are recalculated before payment.8. All checks are signed by the owner or manager.9. Checks are mailed by the owner or manager or a person under her supervision aftersigning.
.10. The accounts payable master file is updated, balanced, and reconciled to the…
The following internal controls for the acquisition and payment cycle were selected from a standard internal control questionnaire.1. Approved purchase orders are required for all acquisitions of goods.2. Prenumbered receiving reports are prepared as support for acquisitions and numeri-cally accounted for.3. Dates on receiving reports are compared with vendors’ invoices before entry into theacquisitions journal.4. Account classifications are reviewed by someone other than the preparer.5. All supporting documents are cancelled after checks are signed or electronic fundstransfers are approved.6. The authorized signer compares data on supporting documents with checks and elec-tronic funds transfer authorizations.7. Vendors’ invoices are recalculated before payment.8. All checks are signed by the owner or manager.9. Checks are mailed by the owner or manager or a person under her supervision aftersigning.
.10. The accounts payable master file is updated, balanced, and reconciled to the…
The accounts payable department usually has responsibility for approving acquisitions for payment by comparing the details on the:
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vendor's invoice and the receiving report only.
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purchase requisition, purchase order, and receiving report.
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vendor's invoice and the purchase requisition only.
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purchase order, receiving report, and vendor's invoice
Chapter 13 Solutions
Auditing and Assurance Services, Student Value Edition (16th Edition)
Ch. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Explain how the calculation and comparison to...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - For each of the eight types of evidence discussed...
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Prob. 16RQCh. 13 - Prob. 17RQCh. 13 - Prob. 18RQCh. 13 - Prob. 19RQCh. 13 - Prob. 20.1MCQCh. 13 - Prob. 20.2MCQCh. 13 - A conceptually logical approach to the auditors...Ch. 13 - Prob. 21.1MCQCh. 13 - Prob. 21.2MCQCh. 13 - Prob. 21.3MCQCh. 13 - Prob. 22.1MCQCh. 13 - b. Substantive analytical procedures are most...Ch. 13 - Prob. 22.3MCQCh. 13 - Prob. 23DQPCh. 13 - Prob. 24DQPCh. 13 - Prob. 25DQPCh. 13 - Prob. 26DQPCh. 13 - Prob. 27DQPCh. 13 - Prob. 28DQPCh. 13 - Prob. 29DQPCh. 13 - Prob. 30DQPCh. 13 - Prob. 31DQPCh. 13 - Prob. 32DQPCh. 13 - Prob. 33DQPCh. 13 - Prob. 35C
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- What are the primary stages and controls in the accounts payable transaction cycle, from receiving vendor invoices to verifying, recording, and making payments to vendors?arrow_forward4. Indicate which department-accounts payable, cash disbursements, data processing, purchasing, inventory, or receiving- has ownership over the following files and registers: a. open purchase order file b. purchase requisition file C. open purchase requisition file d. closed purchase requisition file e. inventory f. closed purchase order file g. valid vendor filearrow_forwardthe purchases and disbursements cycle usually begins when a. a user department request for acquisition of goods or services and submits purchase requisition to the purchasing department b. a check is issued to the vendor or supplier c. the warehouse is received the goods from the vendor or supplier d. the accounting posts the purchase transaction in the accounts payable ledgerarrow_forward
- Accounting information systems have five generic elements . Which of the following pairs includes examples of two different elements within the context of the acquisition /payment process ? Select one : a. All of these b. Journal entry that debits inventory and credits cash O c. Separation of duties and a blind copy of the receiving report O d. Purchase requisition and schedule of accounts payablearrow_forward1. Which of the following is an example of an input control in the expenditure cycle? a. Physical controls over inventory b. Reconciling the bank statement c. Document sequencing d. Access controls over the purchasing system 2. A control procedure that helps prevent duplicate payments is: a. Performing physical inventory counts b. Matching purchase orders, receiving reports, and vendor invoices c. Reconciling bank statements d. Conducting vendor audits 3.Which of the following is an example of an independent verification control in the expenditure cycle? a. Document sequencing b. Reconciling the bank statement c. Segregation of duties d. Physical controls over inventoryarrow_forwardBelow are several of the ASB management assertions. A. Occurrence B. Completeness C. Rights and obligationsD. Allocation or valuationE. ClassificationF. ExistenceG. CutoffH. AccuracyI. UnderstandabilityFor each of the following control activities, identify the management assertion that best applies by placing the correct letter in the blank space below.___ 1. Match shipping documents with sales invoices before a sale is recorded.___ 2. Balance total of individual customers' receivables with the control account.___ 3. Sales manager approves taking discounts.___ 4. Computer check for billing the quantity shipped, list price, and total.___ 5. Account for numerical sequence of pre-numbered shipping documents.arrow_forward
- The purchases and disbursements cycle usually begins when Group of answer choices A user department requests for acquisition of goods or services and submits purchase requisition to the purchasing department. Â A check is issued to the vendor or supplier. The warehouse received the goods from the vendor or supplier. The accounting posts the purchase transaction in the accounts payable ledger.arrow_forwardWhat tools do auditors use to verify the ending balances in the various accounts in the acquisition and payments cycle? Please provide reference(s).arrow_forwardWhich of the following will be the most appropriate test to determine wherether purchase orders are being processed on a timely basis? a. Determine the dates of unpaid accounts payable invoices. b.Compare dates of selected purchase orders with those of purchase requisitions c.select a block of used purchase order numbers and account for all number in the block d. discuss proccessing procedures with operating personnel and observe actual processing of purchases.arrow_forward
- 1. The primary objective of internal controls in the expenditure cycle is to: A. Ensure the accuracy and completeness of financial transactions B. Streamline the procurement process C. Minimize the cost of purchases D. Increase the speed of payment processing 2. An example of a preventive control in the expenditure cycle is: A.Requiring management approval for large purchases B. Regular inventory counts C. Using firewalls and intrusion detection systems D. Conducting vendor audits 3. Which of the following is an example of a processing control in the expenditure cycle? A. Document sequencing B. Reconciling the bank statement C. Physical controls over inventory D. Approval of vendor invoices 4. Purchase orders are used to initiate a payment in the disbursement cycle.True False 5. Â An automated approval workflow for payment processing eliminates the need for managerial oversight and authorization. Â True or Falsearrow_forwardThe following are key controls over the purchasing and disbursement cycle except: A. Proper authorization of purchases B.Timely recording of transactions including independent review C. Proper authorization of disbursement D. Segregation of duties between the credit department and custodyarrow_forward1. Why should the function of requisitioning the purchase of goods be segregated from the function of issuing purchase orders? 2. Explain how an automated matching process works regarding the payment of accounts payable 3. What control objective is addressed by having prenumbered receiving documentsarrow_forward
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