Study unit 16.3 Flashcards
What is the procedures that will be performed for the accuracy assertion of purchases
confirm mathematical accuracy of invoice by recalculating all extension/casts
agree quantity of items charged on invoice against quantity of GRN
confirm prices and discounts used on invoice by inspection of order or purchase contract
recalculate the VAT amount of the invoice to determine the accuracy thereof
by inspection, confirm that VAT number and details of supplier as well as the suppliers’ VAT number is clearly presented on supplier’s tax invoice
reperform casts of purchase journal to determine accuracy thereof
What is the procedures that will be performed for the accuracy assertion of payments
Accuracy
- cast purchase journal
- sample of invoices
- mathematical accuracy
- invoice amount to cash payment journal
What is the tests of controls in the purchases and payments cycle
Inspection
*for a sample of recorded purchase transactions - inspection of requisition and purchase order for authorising signature as proof of approval of the purchases
*inspect a sample of purchase orders to confirm supplier appears on the list of approved suppliers
*inspect master file amendment log and supporting documentation for indication of approval for addition of a supplier to creditors’ master file
*inspect creditor’s reconciliation for signature of senior staff member as proof of review of the accuracy of creditor’s reconciliation
Enquiry
*enquire from the procurement officer if a written procurement policy exists
*enquire of the receiving clerk as to procedures he follows when goods are delivered and what happens when goods that delivered are not listed on purchase order
*enquire from purchase order clerk as to what procedure is followed for placing an order if there is no purchase requisition
*enquire of the financial accountant what happens when payment by EFT must be made and one of the required individuals is not available
Observation
*by observation, determine whether the receiving clerk count the goods and agree to order as well as delivery note and perform a superficial test on the quality of goods received
*observe whether the receiving area is physically secure with proper access controls
Re-performance
*reperform individual creditors’ reconciliation in order to determine the accuracy thereof
*reperform the bank reconciliation to determine the accuracy thereof
What is the procedures that will be performed for the classification assertion of purchases
Classification
*PO classified as expense vs asset to journal
*PO description of goods - expense vs asset
*Purchase journal and invoice - VAT
*purchase journal to creditor’s ledger
for a selection of transactions recorded - trace to supporting invoice with reference to description of goods, determine if correctly classified in G/L
inspect suppliers account in the creditors ledger to confirm that the purchase was correctly posted from the purchase journal
What is the procedures that will be performed for the presentation assertion of purchases
Presentation
- SOCI vs SFP
- disclosure - notes
- accounting policy
What is the procedures that will be performed for the completeness assertion of purchases
Completeness
*DN’s and GRN’s to invoice/purchase journal
*analytical procedures
select a sample of GRN’s and trace them through to corresponding invoices recorded in the purchase journal to determine if the purchases were recorded
What is the procedures that will be performed for the cut-off assertion of purchases
Cut-off
*before year-end - sequence test
*before year-end - DN’s and GRN’s delivery dates vs journal
*after year-end - DN’s and GRN’s delivery dates vs journal
for a selection of transactions in the purchase journal obtain the supporting delivery not/GRN and, by inspection thereof confirm that the goods were received during the year under review/before year end
What is the procedures that will be performed for the occurrence assertion of purchases
*PO/GRN/DN - cross-referenced
*PO/GRN/DN - signed
for a selection of transactions from the purchase journal
-inspect supporting documentation to confirm the invoice is made out in the name of the client, goods purchased are of a type used by the company and documents are signed as proof of authorisation/receipt by an appropriate official and
-trace the purchase transaction to the bank statement and, by inspection, determine if the goods were paid for
What is the procedures that will be performed for the classification assertion of payments
Classification
- payment to creditor’s ledger and GL
- expense not to creditor
What is the procedures that will be performed for the presentation assertion of payments
Presentation
- SOCI vs SFP
- disclosure - notes
- accounting policy
What is the procedures that will be performed for the completeness assertion of payments
Completeness
- Bank reconciliation
- analytical procedures
What is the procedures that will be performed for the cut-off assertion of payments
Cut-off
- before year-end - sequence test
- before year-end - payment, invoice & supporting documentation dates vs journal
- after year-end - payment, invoice & supporting documentation dates vs journal
What is the procedures that will be performed for the occurrence assertion of payments
Occurrence
- sample of invoices from purchase journal
- invoice - name of company
- invoice - goods used by company
- invoice - approved supplier list
- authority for payment - approved PO/GRN
- authority for payment - approved payment requisition
