Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 18, Problem 27DQP
a.
To determine
Explain the ten internal controls that must be followed.
b.
To determine
List the transaction related audit objective
c.
To determine
Explain one of test of control that is useful to test the efficiency of control.
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1. The primary objective of internal controls in the expenditure cycle is to:
A. Ensure the accuracy and completeness of financial transactions
B. Streamline the procurement process
C. Minimize the cost of purchases
D. Increase the speed of payment processing
2. An example of a preventive control in the expenditure cycle is:
A.Requiring management approval for large purchases
B. Regular inventory counts
C. Using firewalls and intrusion detection systems
D. Conducting vendor audits
3. Which of the following is an example of a processing control in the expenditure cycle?
A. Document sequencing
B. Reconciling the bank statement
C. Physical controls over inventory
D. Approval of vendor invoices
4. Purchase orders are used to initiate a payment in the disbursement cycle.True False
5. An automated approval workflow for payment processing eliminates the need for managerial oversight and authorization. True or False
The company XYZ suffers from numerous weaknesses in its internal control system. For each the below situations, you are required to identify the anomaly/risk related to this system and propose eventual solutions.
The financial department issues one copy of the sales bill that is shipped to the customer with the company
The inventory custodian is the person who deliver the merchandise to the
The person who keep the checks (issued and received) is the same who have access to the company accounting system.
A has now 9 years experience in the company. He is responsible to keep cash and checks. Since he joining XYZ , he has not claim any vacation.
The financial manager prepares the checks for the company suppliers and receive the merchandises ordered by the
The company XYZ has recently installed an ERP system to manage all its activities . Different staff have access to this system.
Mr X is working…
A company is trying to set up proper internal controls for their accounts payable/inventory purchasing system. Currently the purchase order is generated by the same person who receives the inventory. Together the purchase order and the receiving ticket are sent to accounts payable for payment. What changes would you make to improve the internal control structure?
Group of answer choices
1.The person in accounts payable should generate the purchase order.
2.The person in accounts payable should generate the receiving ticket once the invoice from the supplier is received.
3.No changes would be made since the person paying the bills is different from the person ordering the inventory.
4.The responsibilities of generating the purchase order and receiving the inventory should be separated among two different people.
Chapter 18 Solutions
Auditing And Assurance Services
Ch. 18 - List five asset accounts, three liability...Ch. 18 - Prob. 2DQPCh. 18 - Prob. 3DQPCh. 18 - Prob. 4DQPCh. 18 - Prob. 5DQPCh. 18 - Prob. 6DQPCh. 18 - Prob. 7DQPCh. 18 - Prob. 8DQPCh. 18 - Prob. 9DQPCh. 18 - Prob. 10DQP
Ch. 18 - Prob. 11DQPCh. 18 - Prob. 13DQPCh. 18 - Prob. 14DQPCh. 18 - Prob. 15DQPCh. 18 - Prob. 16.1MCQCh. 18 - Prob. 16.2MCQCh. 18 - Prob. 16.3MCQCh. 18 - Prob. 17.1MCQCh. 18 - Prob. 17.2MCQCh. 18 - Prob. 17.3MCQCh. 18 - Prob. 18.1MCQCh. 18 - Prob. 18.2MCQCh. 18 - Prob. 18.3MCQCh. 18 - Prob. 19DQPCh. 18 - Prob. 20DQPCh. 18 - Prob. 21DQPCh. 18 - Prob. 22DQPCh. 18 - The following misstatements are included in the...Ch. 18 - Prob. 24DQPCh. 18 - Prob. 25DQPCh. 18 - Prob. 26DQPCh. 18 - Prob. 27DQPCh. 18 - Prob. 28DQPCh. 18 - Prob. 30C
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- Examples of Deviations. Madison Perry, CPA, is conducting an audit of Parker Inc. In sodoing, Perry is performing a study of Parker’s internal control and has identified a numberof important controls related to purchases on which to rely. These controls are as follows:1. There is segregation of duties between the individual authorizing the purchase, the individual preparing the purchase order, and the individual receiving goods and servicesbeing purchased.2. Verification of approval of purchases is evidenced by having the individuals performingthe verification place their initials on the purchase order.3. On receipt of goods or services, invoices from vendors should be matched to purchaseorders. This matching is evidenced by a handwritten notation of the purchase order number on each invoice.4. Mathematical verification of vendor invoices should be evidenced by having the individuals performing the verification place their initials on the invoice itself.5. Payments should be made only…arrow_forwardSadaf Oman Co. is using internal control procedures to mitigate the risks to which it is exposed. Listed below are some internal control procedures applicable to Sadaf Oman Co's revenues and receivable system. Match the most appropriate one of the following risks mitigated to the correct internal control procedure stated below. Risks mitigated: (A) Sales staff misappropriate sales receipts then write off bad debts in the general ledger (B) Sales are made to customers who cannot pay (C) Sales are not made to existing customers (D) Sales staff do not communicate with the accounts staff regularly, so the debt uncollected at the end of the period are written off in the ledger by the accounts staff (E) Customer refuses to pay for goods allegedly not received (F) Customer orders are not being fulfilled. (G) Revenues on books are overstated and exceed actual revenues in bank (H) Posting a sale that is beyond the credit limit of the customers ) Company employees steal collections (U) Without…arrow_forward1. Which of the following is an example of an input control in the expenditure cycle? a. Physical controls over inventory b. Reconciling the bank statement c. Document sequencing d. Access controls over the purchasing system 2. A control procedure that helps prevent duplicate payments is: a. Performing physical inventory counts b. Matching purchase orders, receiving reports, and vendor invoices c. Reconciling bank statements d. Conducting vendor audits 3.Which of the following is an example of an independent verification control in the expenditure cycle? a. Document sequencing b. Reconciling the bank statement c. Segregation of duties d. Physical controls over inventoryarrow_forward
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