Outline Day 12 - Student - Outline Day 12 Chapter 16 17...

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Outline Day 12 Chapter 16 & 17 overview Confirmations? – When to use each type? Why send out confirmations? 1. Positive confirmations 2. Negative confirmations 3. Blank confirmations What to do when errors are discovered in the sample 1. Representative of the population? 2. Take no action 3. Expand audit tests (A/R look at other forms of receipting) 4. Increase sample size 5. Adjust the books 6. Request the client to correct the population 7. Refuse to give an unqualified (clean) opinion Chapter 18 – Audit of the Acquisition and Payment Cycle 3 classes of transactions included in the payment cycle 1. Acquisitions of goods and services 2. Cash disbursements 3. Purchase returns and allowance and purchase discounts Figure 18-1 on page 594 shows good T accounts Business functions 1. Purchase requisitions – request goods and services by an authorized employee 2. Purchase order – document used to order goods and services from vendors 3. Receiving report – Goods received, adequate controls require examination for description, quantity, timely arrival, and condition 4. Vendor invoice – document received from the vendor and shows the amount owed for an acquisition 5. Debit memo – document received from the vendor and indicates a reduction in the amount owed to a vendor because of returned goods or allowance granted 6. Voucher – commonly used by organizations to establish a formal means of recording and controlling acquisitions. Vouchers include a cover sheet and a package of relevant documents 7. Acquisitions transaction file – computer generated file that includes all acquisition transactions processed by the accounting system for a period (day, week, or month) 8. Acquisitions journal or listing – purchases journal (includes vendor name, date, amount , and account classification for each transaction 9.
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