Exam 13: Audit of the Acquisition and Payment Cycle

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

Ordinarily, it is unnecessary to test the valuation of capital assets recorded in prior periods because

When processing and recording cash disbursements, 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

Segregation of duties has an important role in providing for good quality internal controls. Which of the following segregation of duties improve controls over the inventory and distribution cycle?

State each of the five specific transaction-related audit objectives for acquisitions and, for each objective, describe one common test of transactions.

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

Because many of the types of errors and irregularities that may be found in the acquisition and payment cycle represent a misstatement of earnings and are of significant concern to the auditor, the tolerable exception rate selected by the auditor for attribute testing of this cycle will be

The internal control that requires "approval of acquisitions at the proper level" satisfies the objective of

The purpose of the audit procedure to "examine underlying documentation for subsequent cash disbursements" is to

When accounts payable and purchasing systems are highly automated, more detail is included in the transaction files. This deeper level of detail is illustrated by including

Which of the following controls help to ensure that the receipt of raw materials for inventory is recorded in the correct period?

The proper recognition of accounts payable liabilities are crucial to ensure fair statement of the ending accounts payable balance. What documents are required to adequately support accounts payable?

One of the ways to prevent the use of fictitious suppliers to steal company funds is by

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

The starting point for the verification of current-year acquisitions of manufacturing equipment is normally

Because of the importance of tests of controls for acquisitions and cash disbursements, it is common in this audit area to use

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

An important control in the accounts payable and information systems departments is to require that those personnel who record acquisitions do not have access to

The test of details of balances procedure to "inspect the accounts payable trial balance and master file for related parties, notes, or other interest-bearing liabilities" satisfies the objective of

State six specific balance-related audit objectives for accounts payable and for each objective describe one common test of details of balances.