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CHAPTER 17 ACQUISITION CYCLE: TESTS OF CONTROL, SUBSTANTIVE TESTS OF TRANSACTIONS, ACCOUNTS PAYABLE.

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Presentation on theme: "CHAPTER 17 ACQUISITION CYCLE: TESTS OF CONTROL, SUBSTANTIVE TESTS OF TRANSACTIONS, ACCOUNTS PAYABLE."— Presentation transcript:

1 CHAPTER 17 ACQUISITION CYCLE: TESTS OF CONTROL, SUBSTANTIVE TESTS OF TRANSACTIONS, ACCOUNTS PAYABLE

2 NATURE OF CYCLE COMMON FUNCTIONS PURCHASING RECEIVING
PURCHASE REQUISITION PURCHASE ORDER AUTHORIZATION RECEIVING RECEIVING REPORT PHYSICAL CONTROL RECORDING LIABILITY VENDOR INVOICE-VOUCHER CASH DISUBURSEMENT CHECK JOURNAL AUTHORIZATION TO SIGN CHECKS

3 TESTS OF CONTROL AND TRANSACTIONS
SIX TRANSACTION-RELATED AUDIT OBJECTIVES-ACQUISITIONS RECORDED ACQUISITIONS OCCURRED EXAMINE DOCUMENTATION REGARDING ORDER AND RECEIPT EXAMINIE APPROVAL EXISTING TRANSACTIONS ARE RECORDED PRENUMBERED DOCUMENTS RECORDED TRANSACTIONS ARE PROPERLY CLASSIFIED CHART OF ACCOUNTS VERIFICATION OF CLASSIFICATION

4 RECORDED TRANSACTIONS ARE ACCURATE
TIMING IS PROPER RECORDED TRANSACTIONS ARE ACCURATE INTERNAL VERIFICATION OF AMOUNTS TRANSACTIONS SUMMARIZED AND RECORDED APPROVAL OF PRICES AND DISCOUNTS TRANSACTIONS ARE PROPERLY SUMMARIZED AND POSTED

5 SIX TRANSACTION-RELATED AUDIT OBJECTIVES – DISBURSEMENTS
RECORDED TRANSACTIONS OCCURRED SEGREGATION OF DUTIES EXAMINE SUPPORT BEFORE SIGNING CHECK APPROVAL OF PAYMENT RECORDED TRANSACTIONS ARE COMPLETE PRENUMBERD DOCUMENTS RECONCILIATIONS MONTHLY RECORDED TRANSACTIONS ARE ACCURATE INTERNAL VERIFICATIONS CLASSSIFICATION TIMING SUMMARIZATION AND POSTING

6 ACCOUNTS PAYABLE AUDIT OF ACCOUNTS PAYABLE
TESTS OF DETAILS OF BALANCES TRIAL BALANCE OF A/P SEARCH FOR UNRECORDED LIABILITIES SUBSEQUENT CASH DISBURSEMENTS EXAMINE UNPAID BILLS AT END OF AUDIT EXAMINE UNMATCHED RECEIVING REPORTS EXAMINE VENDOR STATEMENTS CONFIRM VENDORS CUTOFF TESTS

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