Exam 11: Auditing the Purchasing Process

Listed below are the major functions of the purchasing process. 1) Purchasing function. 2) General ledger function. 3) Invoice-processing function. 4) Disbursement function. 5) Accounts payable function. 6) Requisition and receiving function. Name four pairs of functions that should be segregated from each other and explain why the segregation is important.

If completeness is a concern for accounts payable, auditors will send accounts payable confirmations to

A purchase transaction usually begins with the preparation of a purchase order.

There are several important disclosure items to consider when auditing the purchasing process. Discuss what they are and why they are important.

Tests designed to detect purchases made before the end of the year that have been recorded in the subsequent year most likely would provide assurance about management's assertion of

After the controls are tested, the auditor sets the achieved level of control risk.

Substantive procedures to examine the occurrence assertion for accounts payable include

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

Which of the following procedures would an auditor least likely perform before the balance sheet date?

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of

Identify the primary functions in the purchases cycle and describe each function.

The occurrence assertion for accounts payable includes

Identify the types of substantive procedures used by the auditor to test accounts payable and accrued expenses. Provide an example of how the auditor may use each substantive procedure. Identify if any of the substantive procedures can be used as a test of controls or a dual-purpose test.

An auditor performs a test to determine whether all merchandise was received for which the entity was billed. The population for this test consists of all

Listed below are six assertions regarding the financial presentations made in the purchasing process. For each, give an example of how an auditor could use one of the typical documents in the purchasing process to test the assertion. Occurrence Completeness Authorization Accuracy Cutoff Classification

A debit memo

In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support?

An entity's procurement system ends with the assumption of a liability and the eventual payment of the liability. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the procurement system?

Analytical procedures can be used to examine the reasonableness of accounts payable and accrued expenses.

Which of the following test(s) of details of transactions can be used as a dual-purpose test in conjunction with tests of controls?