Exam 15: Audit of transaction cycles and financial statement balances I

Necessary controls in the accounts payable and information technology departments include:

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

Describe the audit procedures typically used to test for out-of-period liabilities (also referred to as the search for unrecorded accounts payable).

Receipt of ordered materials by the receiving department will generate the completion of a form called the:

Once the auditor has decided on procedures, the acquisitions and cash payments tests are typically performed:

State each of the six specific transaction-related audit objectives for cash payments, and, for each objective, describe one common substantive test of transactions.

The test of details of balance procedure which requires the auditor to inquire of management for the possibility of the inclusion of consigned or other non-owned inventory is associated with which audit objective?

Discuss the two most common ways in which employees can defraud a company in the payroll area.

'Recorded payroll transactions are for the amount of time actually worked and at the proper pay rate; withholdings are properly calculated' relates to which transaction-related audit objective for payroll?

To test for proper purchases cutoff, an auditor would obtain the number of the last shipping document (bill of lading)issued during the period under audit and verify that the item received had been included in the inventory listing.

A zero balance confirmation

Internal controls over the 'ship finished goods' function in the inventory and warehousing cycle are normally tested by the auditor as a part of performing tests of controls and substantive tests of transactions in the sales and collection cycle.

Discuss the procedures involved in, and the purpose of, a surprise payroll audit.

Statistical sampling is less commonly used for the audit of accounts payable than for accounts receivable because it is more difficult to:

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:

When processing and recording cash payments, it is important to have a method of cancelling the supporting documents to prevent their reuse as support for another cheque at a later time.A common method is to:

State the six specific transactions-related audit objectives as related to payroll, and, for each objective, state one common substantive test of transactions that can be used to test the objective.

Most companies first recognise the liability related to the acquisition of goods at the time when the goods are received by the company.

Which function should the purchasing department NOT be responsible for?

A document received from the vendor indicating such things as the description and quantity of goods and services received, price including freight, cash discount terms, and date of billing is called the voucher.