Exam 15: Auditing Purchases, Payables and Payroll

Following is a description of Out of Control corporations' inventory purchases process for skateboard wheels. Identify the weaknesses in the controls, and suggest possible improvements. When stock falls below 100 the computer automatically produces a purchase requisition for more stock from the supplier. If there is a special promotion coming up, John (the marketing manager) might put in an extra purchase requisition for promotional stock. The computer numbers the dockets in sequence and sends them to the purchasing department. The purchasing department issues a purchase order with their standard supplier when they receive an authorised purchase requisition. John used to work in purchasing, and is good friends with Frank who now manages the purchasing department. John sometimes covers a shift for Frank when he has a day off. When the order arrives at the warehouse receiving dock, the purchase order is compared to the goods received: The personnel check that the right types of wheels are included, the right number of wheels is included, and that they are undamaged. They then prepare a prenumbered receiving report and forward it to accounting along with the suppliers invoice. Accounting then enters the amounts from the supplier invoices into the system.

Confirmation of accounts payable will provide the least amount of evidence for the:

Controls applicable to paying the payroll and protecting unclaimed wages include all of the following except:

A special supervisor's password is required in order to add a new employee to the personnel data master file. This control relates primarily to the:

Tests of details of balances for payables include all of the following except:

The quantity ordered may not be displayed on the copy of the purchase order sent directly to the:

Prior to recording purchases transactions, supplier's invoices are checked and approved in the accounts department. Controls over this function include all of the following except:

A responsibility not normally assigned to receiving department personnel is to:

Identify key controls that ought to be in place for the preparation and signing of cheques.

For the purchasing firm the processing of purchases and payment transactions requires all of the following functions except:

A check by the auditor on the numeric sequence of prenumbered receiving reports to determine that a supplier's invoice was recorded for each relates to the:

For proper control, unclaimed payroll cheques should be stored by the:

Which of the following is not a factor that tends to increase the inherent risk for purchases and payables?

Payroll functions include all of the following except:

List three tests of details of balances for accounts payable and two for payroll balances.

Payroll functions include all of the following except:

Test data may be used to test application controls over accepting and recording data for unpaid suppliers' invoices. Which of the following conditions would not be relevant:

Tests of details of transactions for payables balances include:

In witnessing a payroll distribution, the auditor would not be expected to observe that:

Responsibility for updating of the personnel data master file should rest with authorised employees in the: