Question

In: Accounting

The auditors' working paper that relates control strengths and weaknesses to the assertions about purchases and...

The auditors' working paper that relates control strengths and weaknesses to the assertions about purchases and accounts payable is presented on page 602, This working paper also present the auditors' planned assessed level of contorl risk for each or the assertions, . Prepare an audit plan for tests of the controls over the acquisition cycle use page 496-497 Problem in page 604.

Solutions

Expert Solution

Audit Plan:-

  1. Segregation of duties in purchase transactions:- Observe and enquire about the duties assigned in purchase department
  2. Ensure that system is password protected: - Check whether purchase orders entered by purchase manager are entered through a system which is password protected to ensure that except purchase manager no other person is authorized to make entry into the same.
  3. Vendor List: Check whether authorised vendor list exist and purchases are made from those vendors mentioned therein
  4. Receiving of goods is monitored through purchase order raised and approved: - Ensure that goods so received match with the purchase order raised.
  5. Each receipt order must be sequentially numbered. Thus it is a part of audit procedure to check that all the receipt orders are sequentially numbered
  6. Matching of accounts payable list with invoices. Ensure that all the vendors included in accounts payable list are authorised and purchase bills against the mentioned list are annexed. Also the bills must approved by proper authority.
  7. Exception report must be followed, Sample of exception report must be selected and inspection for evidences supporting follow up must be checked.
  8. Disbursements to vendors must be approved. It must be enquired about the treasurer that how disbursements are made. Sample of authorised disbursements must be selected and examination about it can be done.

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