Chapter 14 - Auditing Of Accounts Payable And Other Liabilities

Front 1

3 types of transactions that are processed through the purchasing process

Back 1

purchases of goods and services for cash or credit

payment of the liabilities arising from such purchases

return of goods to supplies for cash or credit

Front 2

purchase transaction affects what accounts? 4

Back 2

a/p, inventory purchases or CGS, various assets and expense accounts

Front 3

cash disbursement transation affects what accounts? 4

Back 3

cash, a/p, cash discounts, assets and expense accounts

Front 4

purchase return transaction affects what accounts? 4

Back 4

purchase returns, purchase allowances, a/p, assets and expense accounts

Front 5

purchase requisition

Back 5

request to purchase goods or services

Front 6

purchase order

Back 6

includes description, quality, and quantity or goods or services being purchased

Front 7

receiving report

Back 7

records the receipt of goods

Front 8

vendor invoice

Back 8

the bill from the vendor

Front 9

voucher

Back 9

serves as the basis for recording a vendor's invoice

Front 10

voucher register

Back 10

used to record vouchers for goods and services

Front 11

a/p subsidiary ledger

Back 11

includes amount owed to individual vendors

Front 12

vendor statement

Back 12

represents the purchase activity with vendor

Front 13

check

Back 13

pays for goods or services

Front 14

check register

Back 14

contains columns to record credits to cash and debits to a/p and cash discounts

Front 15

pur and dis should be segregated

Back 15

purchases and disbursements

Front 16

there must be approval of pur orde

Back 16

purchase orders

Front 17

matching of det of ven invoi to pur ord and receg docum

Back 17

vendors' invoices, purchase orders, receiving documents

Front 18

approval of ven invoi

Back 18

vendors invoices

Front 19

function of requisitioning? 1

Back 19

initiation and approval of requests for goods by authorized ppl

Front 20

function of purchasing? 2

Back 20

approval of purchase orders and proper execution as to price, quantity,quality, and vendor

Front 21

function of receiving? 1

Back 21

receipt of goods

Front 22

function of invoice processing? 2

Back 22

processing of vendor invoices for goods . also, processing of adjustments for allowances, discounts,and returns

Front 23

function of disbursement? 1

Back 23

processing of payment to vendors

Front 24

function of a/p? 1

Back 24

recording of vendor invoices, cash disbursmts, and adjustments in indivual vendor accounts

Front 25

function of g/l? 1

Back 25

proper accumulation, classification, and summarization of purchases, cash disburmst, and payables in the GL

Front 26

purchasing should be segregated from

Back 26

requisitioning

Front 27

invoice processing function separated from

Back 27

a/p

Front 28

disbursements should be separated from

Back 28

a/p

Front 29

a/p separated from

Back 29

GL

Front 30

receipt of vendor invoices/matching to supporting documents should be done by what dept

Back 30

a/p

Front 31

coding of account distributions should be done by what dept

Back 31

a/p

Front 32

preparation of vendor checks should be done by

Back 32

IT

Front 33

signing and mailing of vendor checks done by

Back 33

cashier

Front 34

preparation of the voucher register done by

Back 34

IT

Front 35

reconciliation of voucher register to GL

Back 35

a/p

Front 36

COCACA

Back 36

completeness, obligations, cutoff, authorization, classification, accuracy

Front 37

Occurrence

Back 37

All purchases and cash disbursements have been recorded and have occurred and pertain to the entity

Front 38

accuracy

Back 38

amounts relating to recorded purchases and cash disbursements have been recorded properly

Front 39

cutoff

Back 39

purchases and cash disbursements have been recorded in the correct accounting period

Front 40

classification

Back 40

purchases and cash disbursements have been recorded in the proper account

Front 41

substantive tests of controls for occurence

Back 41

observe and evaluate proper segregation of duties. test of vouchers for the presence of an authorized purchase order and receiving report. examine paid vouchers and supporting documents for indication of cancellation

Front 42

substantive tests of controls for completeness

Back 42

check for numerical sequence. trace a sample of receiving reports to their vendor invoices and vouchers. trace a sample of vouchers to the purchases journal

Front 43

substantive tests of controls for authorization

Back 43

review client's competitive bidding process

Front 44

substantive tests of controls for accuracy

Back 44

recompute the mathematical accuracy of vendor invoice. agree for vouchers for porduct, quantity, and price. examine reconciliation of vouchers to daily a/p report

Front 45

occurance - auditor is concerned that no payment was made and a entry was made in the cash disbursements. how do you prevent this? 4

Back 45

segregation of duties, independent reconciliation and review of vendors statements, monthly bank reconciliations

Front 46

completeness - auditor is concerned that a cash disbursements is made not recorded. how do u fix this?

Back 46

numerical sequence of checks and reconcile the daily cash disbursements with posting to the a/p subsidiary records

Front 47

accuracy - major concern is that the payment amount is recorded wrong. how to prevent?

Back 47

client personnel should reconcile the total of the checks issued each day with the daily cash disbursements reports.

Front 48

the auditors tests of controls include reviewing the reconciliation of checks with postings to the cash disbursements journal and a/p subsi records. not a question

Back 48

not a question

Front 49

concern of classification of cash disbursements transactions? also, how do u prevent this?

Back 49

that is may be charged to the wrong GL account.

the use of a chart of accounts, as well as independent approval and review of the account code on the voucher should provide adequate control

Front 50

does the auditor test controls relating to purchase returns? No, but substantive testing is used to test the reasonableness of the amount

Back 50

no