Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Vendors' statements and vendors' invoices are both relatively reliable evidence because they:

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

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?

What typically initiates the acquisitions and payment cycle?

The overall objective in the audit of the acquisition and payment cycle is:

Cutoff information for inventory acquisitions should be obtained during:

When verifying the correct balance in accounts payable, vendors' invoices are more useful than vendors' statements.

Receiving reports are normally only used to document the receipt of goods and are not used to document the receipt of services.

Which of the following is not a key control in the acquisition and payment cycle?

With respect to a small company's system of purchasing supplies, an auditor's primary concern should be to obtain satisfaction that supplies ordered and paid for have been:

Auditing the acquisition and payment cycle often takes more time than any other cycle.

The test of transactions which requires one to "reconcile recorded cash disbursements with the cash disbursements on the bank statement" satisfies the objective of:

When assets are being verified, auditors focus much of their attention on making sure that the accounts are not overstated.Alternatively, auditors focus their efforts on understatement when auditing liabilities.What is the primary reason for this difference in focus?

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:

How do auditors determine the extent of testing of internal controls in the acquisition and payment cycle?

Discuss each of the four business functions that comprise the acquisition and payment cycle.

It is common in the acquisition and payment cycle for transactions to require significant judgment.

When testing the controls for the completeness transaction-related audit objectives:

Which of the following should sign checks under conditions of effective internal control?

An auditor is using audit sampling to test transactions in the acquisition and payment cycle.She would normally set the tolerable exception rate at what level?