Flashcards in Understanding Internal Control/Assessing Control Risk - Wiley Deck (5):
Which documents need to be present before payment is approved?
Purchase order, receiving report, vendor's invoice.
(showing order, receipt, and bill for goods)
How can a firm prevent duplicate payments made on duplicate invoices?
Cancel the required supporting documents (purchase order, receiving report, vendor invoice) after the invoice is paid the first time.
What audit test could be used to determine whether recorded purchases represent valid business expenses?
Compare samples of recorded disbursements w/properly approved purchase orders, purchase requisition, vendor's invoices, and receiving reports.
What audit procedure would test whether actual purchases are recorded?
Sample purchase requisitions and agree them to the purchase orders and then to the purchases journal (and subsequent general ledger posting)