Unit 7 Assignment - Running Head Unit 7 Assignment 1 Unit 7...

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Running Head: Unit 7 Assignment 1 Unit 7 Assignment Ryan Tackett September 15, 2015 AC 410 Professor Beiser
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Unit 7 Assignment 2 Question 14-37 The following are typical questions that might appear on an internal control questionnaire for accounts payable. 1. Are monthly statements from vendors reconciled with the accounts payable listing? 2. Are vendors' invoices matched with receiving reports before they are approved for payment? Required: a. Describe the purpose of each of the above internal control activities. 1. This process helps reduce the risk of under and overstatements. 2. Helps minimize the effects on the user end. For example, a client paying for goods that have not been received yet. b. Describe the manner in which each of the above procedures might be tested. 1. An auditor could review the assumptions made by the client as it relates to the yearly reconciliations. 2. An auditor could test a random portion of payments made throughout the year to vendors. c. Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of the risk of material misstatement. 1. An auditor could take the audit to the next level if the statements were not reconciled by reviewing unmatched receiving reports, confirmation and the search for unrecorded liabilities reconciliation of payable vendors’ statements (Whittington, 2014).
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