Exam 13: Audit of the Acquisition and Payment Cycle

To ensure that goods and services acquired are for authorized company purposes, and to help acquire only needed items

The major balance sheet account in the acquisition and payment cycle is

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

ZyCo has recently converted to a new online accounts payable system. To test that all vendor balances have been converted to the vendor master file (completeness), the auditor would

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

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?

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

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

A set of records for each piece of equipment that includes descriptive information, date of acquisition, original cost, current year amortization, and accumulated amortization is the

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

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

It is normal for the auditor to verify large and unusual transactions for the entire year as well as a representative sample of typical additions. The size of the sample for substantive testing depends on the auditor's

The internal control that requires an "independent verification of calculations and amounts" satisfies the objective of

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

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

Describe the two objectives that are most important in auditing accumulated amortization. Explain why these objectives are important.

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

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

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?

The internal control that requires "new vendors and changes to vendor file be approved" satisfies the objective of