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The document outlines the objectives and methodology for auditing the acquisition and payment cycle. It discusses:
1. Identifying the key accounts and transactions in this cycle like inventory, accounts payable, expenses.
2. Describing the internal controls over authorization of purchases, separation of duties, and timely recording.
3. Designing tests of controls and substantive tests of transactions to meet audit objectives, including analytical procedures and testing account balances.
4. Distinguishing the reliability of different types of audit evidence for verifying account balances and transactions, with confirmations regarded as most reliable.
The document outlines the objectives and methodology for auditing the acquisition and payment cycle. It discusses:
1. Identifying the key accounts and transactions in this cycle like inventory, accounts payable, expenses.
2. Describing the internal controls over authorization of purchases, separation of duties, and timely recording.
3. Designing tests of controls and substantive tests of transactions to meet audit objectives, including analytical procedures and testing account balances.
4. Distinguishing the reliability of different types of audit evidence for verifying account balances and transactions, with confirmations regarded as most reliable.
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als PPTX, PDF, TXT herunterladen oder online auf Scribd lesen
The document outlines the objectives and methodology for auditing the acquisition and payment cycle. It discusses:
1. Identifying the key accounts and transactions in this cycle like inventory, accounts payable, expenses.
2. Describing the internal controls over authorization of purchases, separation of duties, and timely recording.
3. Designing tests of controls and substantive tests of transactions to meet audit objectives, including analytical procedures and testing account balances.
4. Distinguishing the reliability of different types of audit evidence for verifying account balances and transactions, with confirmations regarded as most reliable.
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als PPTX, PDF, TXT herunterladen oder online auf Scribd lesen
Cycle: Tests of Controls, Substantive Tests of Transactions, and Account Objective 1: Identify the accounts and the classes of transactions in the acquisition and payment cycle
Objective 2: Describe the business functions
and the related documents and records in the acquisition and payment cycle Accounts and Classes of Transactions in the Acquisition and Payment Cycle Acquisition of goods and services Cash disbursements Purchase returns and allowances and purchase discounts Acquisitions Accounts: Inventory Property, Plant, and Equipment Prepaid Expenses Leasehold Improvements Accounts Payable Manufacturing Expenses Selling Expenses Administrative Expenses Acquisitions Cash Disbursements Objective 3: Understand internal control and design and perform tests of controls and substantive tests of transactions for the acquisition and payment cycle Methodology for Designing Tests of Controls and Substantive Tests of Transactions Understand internal control Assess planned control risk Evaluate cost-benefit of testing controls Designing test of controls and substantive tests of transactions to meet transaction-related audit objectives Key Internal Control Authorization of purchases Separation of asset custody from other functions Timely recording and independent review of transactions Authorization of payments Objective 4: Describe the methodology for designing tests of detail balances for accounts payable usig the audit risk model Methodology for Designing Tests of Detail of Balances for Accounts Payable
Set tolerable misstatement and assess inherent
risk for accounts payable Assess control risk for accounts payable Design and perform tests of controls and substantive tests of transactions for the acquisition and payment cycle Design and perform analytical procedures for the acquisition and payment cycle Design tests of details of accounts payable balance to satisfy balance-related audit objective Objective 5: Design and perform analytical procedures for accounts payable Analytical Procedures for the Acquisition and Payment Cycle Objective 6: Design and perform tests of details of balances for accounts payable, including out- of-period liability tests Out-of-Period Liability Tests Examine underlying documentation for subsequent cash disbursement Examine underlying documentation for bills not paid several weeks after the year-end Trace receiving reports issued before year-end to related vendor’s invoices Trace vendors’ statements that show a balance due to the accounts payable trial balance Send confirmations to vendors with which the client does business Cutoff Tests Examine underlying documentation for subsequent cash disbursement Examine underlying documentation for bills not paid several weeks after the year-end Trace receiving reports issued before year-end to related vendor’s invoices Examination of receiving reports Determination of the amount of inventory in transit Objective 7: Distinguish the reliability of vendors’ invoices, vendors’ statements, and confirmations of accounts payable as audit evidence Vendors’ Invoices vs Vendors’ Statements The vendors’ statements is superior for verifying accounts payable The vendors’ invoice is superior for verifying transactions Confirmations of accounts payable are regarded as more reliable than vendor’s statements