Question 1

Purchase orders become part of the transaction trail of documentary evidence that directly supports which assertion for purchase transactions?

Accepted Answer

A)  existence or occurrence. 
B)  rights and obligations. 
C)  accuracy or valuation. 
D)  presentation and disclosure. 
A)  existence or occurrence. 
B)  rights and obligations. 
C)  accuracy or valuation. 
D)  presentation and disclosure. A

Question 2

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except:

Accepted Answer

A)  integrity and ethical values. 
B)  management's commitment to competence. 
C)  design of substantive procedures. 
D)  assignment of authority and responsibility. 
A)  integrity and ethical values. 
B)  management's commitment to competence. 
C)  design of substantive procedures. 
D)  assignment of authority and responsibility. C

Question 3

A copy of the receiving report should be sent directly by the receiving department to the:

Accepted Answer

A)  accounts (receivable) department. 
B)  chief financial controller 
C)  purchasing department. 
D)  accounts (payable) department. 
A)  accounts (receivable) department. 
B)  chief financial controller 
C)  purchasing department. 
D)  accounts (payable) department. D

Question 4

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

Accepted Answer

A)  the need to achieve announced profitability targets. 
B)  the need to disclose concern over control problems. 
C)  temptations for employees to make unauthorised purchases. 
D)  temptations for employees to misappropriate purchased assets. 
A)  the need to achieve announced profitability targets. 
B)  the need to disclose concern over control problems. 
C)  temptations for employees to make unauthorised purchases. 
D)  temptations for employees to misappropriate purchased assets.

Question 5

Which of these is not directly affected by purchases and payments transactions?

Accepted Answer

A)  plant assets. 
B)  work-in-process inventory. 
C)  accounts payable. 
D)  prepaid expenses. 
A)  plant assets. 
B)  work-in-process inventory. 
C)  accounts payable. 
D)  prepaid expenses.

Question 6

What could motivate management to misstate expenditures? What other factors may lead to misstatements?

Accepted Answer

-They may understate expenses in order t

Question 7

1. On what basis are the tests of details of balances planned?
2. What are the stages in applying analytical procedures to payables?

Accepted Answer

1.They are planned on the basis that the

Question 8

The specific audit objective "accounts payable are liabilities of the entity at the balance date" is derived from the:

Accepted Answer

A)  completeness assertion. 
B)  valuation or measurement assertion. 
C)  presentation or disclosure assertion. 
D)  rights and obligations assertion. 
A)  completeness assertion. 
B)  valuation or measurement assertion. 
C)  presentation or disclosure assertion. 
D)  rights and obligations assertion.

Question 9

Identify and describe three key issues relevant to the audit of purchases, payables and payroll.

Accepted Answer

1. That purchases are all recorded and a

Question 10

Which of these is not a procedure for identifying unrecorded liabilities?

Accepted Answer

A)  examination of the subsequent period's purchase and payment transactions. 
B)  analytical procedures for expense and liability balances. 
C)  examination of contractual commitments. 
D)  confirmation of accounts payable. 
A)  examination of the subsequent period's purchase and payment transactions. 
B)  analytical procedures for expense and liability balances. 
C)  examination of contractual commitments. 
D)  confirmation of accounts payable.

Question 11

Wage rate increases should be authorised in writing by the:

Accepted Answer

A)  payroll department. 
B)  personnel department. 
C)  finance department. 
D)  data entry department. 
A)  payroll department. 
B)  personnel department. 
C)  finance department. 
D)  data entry department.

Question 12

In most modern organisation employee timekeeping data is recorded via:

Accepted Answer

A)  employee badges. 
B)  time-clock cards. 
C)  security identification cards. 
D)  sign-in/sign-off book. 
A)  employee badges. 
B)  time-clock cards. 
C)  security identification cards. 
D)  sign-in/sign-off book.

Question 13

Segregation of the functions of payroll and personnel do all of the following, except:

Accepted Answer

A)  reduce the risk of payments to fictitious employees. 
B)  reduce the risk of payments to terminated employees. 
C)  restrict the recording of new employee data to the payroll department. 
D)  restrict the payment of wages to the payroll department. 
A)  reduce the risk of payments to fictitious employees. 
B)  reduce the risk of payments to terminated employees. 
C)  restrict the recording of new employee data to the payroll department. 
D)  restrict the payment of wages to the payroll department.

Question 14

Identify the need for controls over hiring employees, authorising payroll changes and preparing attendance and timekeeping data.

Accepted Answer

Hiring employees: controls are ne

Question 15

Why are directors' and executive officers' remuneration considered to be audit sensitive?
What procedure could be used to check directors' and executive officers' remuneration?

Accepted Answer

Directors' and executive officers' remun

Question 16

Which of the following is not an initial procedure for verifying accounts payable?

Accepted Answer

A)  trace the opening balance to the prior year's working papers (if applicable). 
B)  review activity in the general ledger account for any unusual entries. 
C)  reconcile accounts to monthly supplier's statements. 
D)  obtain a listing of amounts owed at the balance sheet date. 
A)  trace the opening balance to the prior year's working papers (if applicable). 
B)  review activity in the general ledger account for any unusual entries. 
C)  reconcile accounts to monthly supplier's statements. 
D)  obtain a listing of amounts owed at the balance sheet date.

Question 17

Explain the nature, and use, of an imprest payroll account.

Accepted Answer

It is an account that only has payroll t

Question 18

With regards to control risk assessment for purchase transactions, align the potential misstatements in the following chart with their possible tests of operating effectiveness.
 \[\begin{array} { | l | l | } 
\hline \text { Patential Misstatenent } & \text { Passible Tests d Operating Eifectiveness } \
\hline \begin{array} { l } 
\text { Goods rnay be requisitioned for urauthorised } \
\text { puposes. }
\end{array} & \text { Inspect sigred irventory receipts. } \
\hline \begin{array} { l } 
\text { Purchases may be made for urauthorised } \
\text { puposes. }
\end{array} & \begin{array} { l } 
\text { Exarnine supporting documentation for } \
\text { irvoices. }
\end{array} \
\hline \text { Goods received may not have beer ordered. } & \begin{array} { l } 
\text { Exarnine receiving report for matchirg } \
\text { purchase order. }
\end{array} \
\hline \begin{array} { l } 
\text { Stores clerks may deny taking custody of } \
\text { purchased goods. }
\end{array} & \begin{array} { l } 
\text { Exarnine purchase orders far approved } \
\text { requisitions. }
\end{array} \
\hline \begin{array} { l } 
\text { Irvoices may be recorded for goods not } \
\text { ordered. }
\end{array} & \begin{array} { l } 
\text { Exarnirue evidence of independent check, or } \
\text { re-perfonm independent check }
\end{array} \
\hline \begin{array} { l } 
\text { Irvoices may be recorded incorrectly or not } \
\text { recorded. }
\end{array} & \text { Enquire about procedures. }\
\hline
\end{array}\]

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 19

The receiving department should be instructed to accept no goods without having on file a properly authorised:

Accepted Answer

A)  purchase requisition. 
B)  invoice. 
C)  receiving report. 
D)  purchase order. 
A)  purchase requisition. 
B)  invoice. 
C)  receiving report. 
D)  purchase order.

Question 20

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the:

Accepted Answer

A)  warehouse department. 
B)  accounts department. 
C)  purchasing department. 
D)  internal audit department. 
A)  warehouse department. 
B)  accounts department. 
C)  purchasing department. 
D)  internal audit department.

Purchase orders become part of the transaction trail of documentary evidence that directly supports which assertion for purchase transactions?

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except:

A copy of the receiving report should be sent directly by the receiving department to the:

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

Which of these is not directly affected by purchases and payments transactions?

What could motivate management to misstate expenditures? What other factors may lead to misstatements?

1. On what basis are the tests of details of balances planned? 2. What are the stages in applying analytical procedures to payables?

The specific audit objective "accounts payable are liabilities of the entity at the balance date" is derived from the:

Identify and describe three key issues relevant to the audit of purchases, payables and payroll.

Which of these is not a procedure for identifying unrecorded liabilities?

Wage rate increases should be authorised in writing by the:

In most modern organisation employee timekeeping data is recorded via:

Segregation of the functions of payroll and personnel do all of the following, except:

Identify the need for controls over hiring employees, authorising payroll changes and preparing attendance and timekeeping data.

Why are directors' and executive officers' remuneration considered to be audit sensitive? What procedure could be used to check directors' and executive officers' remuneration?

Which of the following is not an initial procedure for verifying accounts payable?

Explain the nature, and use, of an imprest payroll account.

The receiving department should be instructed to accept no goods without having on file a properly authorised:

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Completing the Audit

Filters

Exam 15: Auditing Purchases, Payables and Payroll

Purchase orders become part of the transaction trail of documentary evidence that directly supports which assertion for purchase transactions?

Factors relating to the internal control environment that the auditor needs to consider when assessing control risk for purchase, payment and payroll transactions include all of these except:

A copy of the receiving report should be sent directly by the receiving department to the:

An important consideration in assessing inherent risk for purchase transactions is any motivation management may have to misstate expenditure. Which of the following is not a factor that may contribute to misstatement?

Which of these is not directly affected by purchases and payments transactions?

What could motivate management to misstate expenditures? What other factors may lead to misstatements?

1. On what basis are the tests of details of balances planned? 2. What are the stages in applying analytical procedures to payables?

The specific audit objective "accounts payable are liabilities of the entity at the balance date" is derived from the:

Identify and describe three key issues relevant to the audit of purchases, payables and payroll.

Which of these is not a procedure for identifying unrecorded liabilities?

Wage rate increases should be authorised in writing by the:

In most modern organisation employee timekeeping data is recorded via:

Segregation of the functions of payroll and personnel do all of the following, except:

Identify the need for controls over hiring employees, authorising payroll changes and preparing attendance and timekeeping data.

Why are directors' and executive officers' remuneration considered to be audit sensitive? What procedure could be used to check directors' and executive officers' remuneration?

Which of the following is not an initial procedure for verifying accounts payable?

Explain the nature, and use, of an imprest payroll account.

The receiving department should be instructed to accept no goods without having on file a properly authorised:

Responsibility for determining that unpaid supplier's invoices are processed for payment on their due dates generally lies with the:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Completing the Audit

Filters