Based on the Internal Controls and Transaction-Related Audit Objective follow the procedures below in determining the...

Based on the Internal Controls and Transaction-Related Audit Objective follow the procedures below in determining the Control Activity, Existence Test and Error Test in bold. Follow by a brief explanation of why this is suitable for the specific category.

· Determine the Control activity for your assigned control. e.g Separation of Duties. Adequate documents and records, etc

· What test would you run to determine the Existence of the Control. e.g Observation, Inspection, etc.

· What test would you run to determine that there are no errors of the type the control is designed to identify? e.g. Occurrence, Completeness, etc.

Internal Controls	Transaction-Related Audit Objective	Control Activity	Existence test	Error Test
1. Required use of PO and receiving report with check of completeness	Recorded acquisitions are for goods and services received (occurrence).
2. Proper approval	Recorded acquisitions are for goods and services received (occurrence).
3. Segregation of functions	Recorded acquisitions are for goods and services received (occurrence).

Expert Solution

Internal Controls	Transaction-Related Audit Objective	Control Activity	Existence test	Error Test
1. Required use of PO and receiving report with check of completeness	Recorded acquisitions are for goods and services received (occurrence).	Correctness of PO Here, the auditor has to verify the correct use of POs by comparing the same with receiving report	Analytical procedures The auditor has to count the totals of transactions and POs and totals of amounts as per both records, totals of quantities as per both records, etc.	Accuracy The auditor has to check the correctness and accuracy by comparing the PO s and receiving report
2. Proper approval	Recorded acquisitions are for goods and services received (occurrence).	Adherence with Authority matrix (Obtaining approvals from appropriate authorities) Because proper approvals can be ensured based on verification with Delegation of authority matrix	Inspection of records and documents The auditor has to inspect the documents to check if the approvals are provided by appropriate authorities	Completeness The auditor has to verify if the approvals obtained are complete in all respects as per the authority matrix
3. Segregation of functions	Recorded acquisitions are for goods and services received (occurrence).	Segregation of duties causing conflict of interest Segregation of functions is done to ensure that the activities causing conflict of interest are divided among different people	Enquiry and confirmations Inspection The auditor has to first inspect the responsibility documents, enquire the management about the organisational hierarchy and confirm if the functions are appropriately segregated	Existence The auditor has to verify if the segregation of activities exist in the organisation

ekkarill92 answered 4 weeks ago

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