Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls,

Explain why auditors should compare current year expense totals with prior year expense totals as an analytical procedure for accounts payable.

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Question 1

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Auditors should compare current year expense totals with prior years to uncover misstatements in accounts payable as well as in the expense accounts.Because of double-entry accounting,a misstatement of an expense account usually also results in an equal misstatement of accounts payable.Therefore,comparing current expenses such as rent,utilities,and other regularly scheduled bills with prior years is an effective procedure for analyzing accounts payable when expenses from year to year are expected to be relatively stable.

A key internal control over the acquisition cycle is to ensure that the company requires recording transactions as soon as possible after the goods and services have been received.This satisfies the transaction-related audit objective of

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Question 2

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Discuss the key internal controls that should be present in the processing purchase orders function in the acquisitions and payment cycle.

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Question 3

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Proper authorization for acquisitions ensures that the goods and services acquired are for authorized company purposes,and it avoids the acquisition of excessive or unnecessary items.Most companies require different levels of authorization for different types of acquisitions or dollar amounts.For effective internal control,the purchasing department should be separate from those who authorize the acquisition or receive the goods.Purchase orders should be prenumbered to permit easier accounting for all outstanding purchase orders and should be designed to minimize the likelihood of unintentional omissions on the form when goods are ordered.

The cash account is not part of the acquisitions and payment cycle.

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Question 4

A misstatement of an expense account usually also results in an equal misstatement of accounts receivable.

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Question 5

When auditing accounts payable,the auditor is more concerned about the possibility of understatements than overstatements.

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Question 6

The "rights "aspect of the "rights and obligations" objective is not applicable to liabilities.

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Question 7

Which of the following is the most effective control procedure to detect vouchers that were prepared for the payment of goods that were not received?

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Question 8

Which of the following is not one of the classes of transactions in the acquisition and payment cycle?

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Question 9

An acquisitions transaction file is a computer generated file that includes all information entered into the system regarding acquisition transactions.

(True/False)

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Question 10

You are the in-charge auditor and are designing audit procedures for accounts payable.Which of the following management assertions would you normally be most concerned about?

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Question 11

For effective internal control purposes,the accounts payable department generally should

(Multiple Choice)

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Question 12

In the processing and recording of cash disbursements,

(Multiple Choice)

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Question 13

Smaller privately held companies may not maintain an accounts payable master file by vendor.These companies pay on the basis of

(Multiple Choice)

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Question 14

Significant audit efficiencies can be achieved on many audits when controls are operating effectively.

(True/False)

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Question 15

The auditor gets highly reliable evidence about individual transactions by examining

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Question 16

The acquisition and payment cycle typically begins with the initiation of a purchase requisition for goods and services from an authorized individual.

(True/False)

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Question 17

An inventory acquisition is received late in the afternoon of December 31 after the physical inventory is completed.If the acquisition is included in accounts payable and purchases,but excluded from inventory,the result

(Multiple Choice)

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Question 18

Cutoff information for inventory acquisitions should be obtained during

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Question 19

The balance-related audit objective realizable value is not applicable when auditing accounts payable.

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Question 20

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Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls,

Explain why auditors should compare current year expense totals with prior year expense totals as an analytical procedure for accounts payable.

A key internal control over the acquisition cycle is to ensure that the company requires recording transactions as soon as possible after the goods and services have been received.This satisfies the transaction-related audit objective of

Discuss the key internal controls that should be present in the processing purchase orders function in the acquisitions and payment cycle.

The cash account is not part of the acquisitions and payment cycle.

A misstatement of an expense account usually also results in an equal misstatement of accounts receivable.

When auditing accounts payable,the auditor is more concerned about the possibility of understatements than overstatements.

The "rights "aspect of the "rights and obligations" objective is not applicable to liabilities.

Which of the following is the most effective control procedure to detect vouchers that were prepared for the payment of goods that were not received?

Which of the following is not one of the classes of transactions in the acquisition and payment cycle?

An acquisitions transaction file is a computer generated file that includes all information entered into the system regarding acquisition transactions.

You are the in-charge auditor and are designing audit procedures for accounts payable.Which of the following management assertions would you normally be most concerned about?

For effective internal control purposes,the accounts payable department generally should

In the processing and recording of cash disbursements,

Smaller privately held companies may not maintain an accounts payable master file by vendor.These companies pay on the basis of

Significant audit efficiencies can be achieved on many audits when controls are operating effectively.

The auditor gets highly reliable evidence about individual transactions by examining

The acquisition and payment cycle typically begins with the initiation of a purchase requisition for goods and services from an authorized individual.

An inventory acquisition is received late in the afternoon of December 31 after the physical inventory is completed.If the acquisition is included in accounts payable and purchases,but excluded from inventory,the result

Cutoff information for inventory acquisitions should be obtained during

The balance-related audit objective realizable value is not applicable when auditing accounts payable.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

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Internal and Governmental Financial Auditing and Operational Auditing

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