Exam 13: Audit of the Acquisition and Payment Cycle

Since the audit of accounts payable generally takes a considerable amount of audit time,effective and properly tested internal controls can significantly reduce audit costs by reducing

Which of the following areas are tested as part of the audit of the acquisition and payment cycle?

When automatic purchase orders are generated,to help make sure that goods are ordered for products that the company still needs,the company should

To determine whether accounts payable are complete,an auditor performs a test to verify that all merchandise received is recorded.Which of the following is the population for this test?

Comparing expenses to prior years is an effective analytical procedure for accounts payable because expenses from year to year are

Discuss the key internal controls related to the disposal of manufacturing equipment.

ZyCo has recently converted to a new online accounts payable system.To test that only authorized vendors have been converted to the vendor master file (occurrence),the auditor would

Of these two documents - vendor invoice or vendor statements - which document is better to: a)verify the correct balance in accounts payable? b)test the acquisitions in tests of control?

The analytical procedure that requires the auditor to "inspect the list of accounts payable for unusual or non-vendor payables" would have the best chance of discovering which possible error?

Which business functions are part of the acquisition and payment cycle?

What are the significant risks relating to accounts payable and accrued liabilities?

An auditor learns that his client has paid a vendor twice for the same shipment,once based upon the original invoice and once based upon the monthly statement.A control procedure that should have prevented this duplicate payment is

An auditor wants to perform tests of controls on a client's cash disbursement procedures.If the control procedures leave no audit trail or documentary evidence,the auditor is most likely to test the procedures by

The purchase order,usually in writing,is a legal document that is

A normal audit procedure is to analyze the current year's repairs and maintenance accounts to provide evidence in support of the audit proposition that

What are the common key controls relating to acquisitions?

The test of transactions that requires the recomputing of cash discounts satisfies the objective of

The purpose of the audit procedure to "trace receiving reports issued before year-end to related vendors' invoices" is to determine that all

Estimated unpaid obligations for services or benefits that have been received prior to the balance sheet date are classified as

One form of accounts payable fraud occurs when the accounts payable clerk or another employee steals a cheque made payable to a legitimate vendor.The purchaser's information is then resubmitted for payment and the second cheque sent to the vendor.How could such a theft be prevented?