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

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

A document generally received from the vendor which indicates a reduction in the amount owed due to the company granting an allowance is a:

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

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

When auditors examine vendors' statements or receive confirmations,there must be a reconciliation of the statement or confirmation with the:

What are the three most important controls over cash disbursements?

When the client's physical inventory occurs before the last day of the year,it is still necessary to perform an accounts payable cutoff at the time of the count.In addition,the auditor must verify whether all acquisitions taking place between the count and the end of the year were added to:

Peprah Company pays its accounts payable 45 days after receipt of the goods or services.In this case which audit procedure should be used to detect any unrecorded liabilities?

A document review of which of the following is most likely to yield evidence of any unrecorded liabilities?

At what point do most companies recognize liabilities in the acquisition and payment cycle when the goods are shipped FOB destination?

Auditors are normally more concerned about violations of the completeness objective for acquisitions than about violations of the occurrence objective for acquisitions.

After a purchase requisition is approved,a ________ must be initiated to purchase the goods or services.

By tracing receiving reports issued at and before year-end to vendors' invoices and making sure they are included in accounts payable,the auditor is testing for:

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?

The extent of a search for unrecorded liabilities largely depends on:

A vendor's statement is unreliable and auditors rarely use it.

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

The auditor is performing tests of transactions for individual accounts payable transactions with vendors.Which document provides more reliable information about individual transactions with vendors?

Discuss the circumstances in which it is desirable to send confirmation requests to the client's vendors.

The auditor has decided to use accounts payables confirmations when testing substantive testing for balances.Which two management assertions is she testing?