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PINNACLE_MANUFACTURING_part_3-1

PINNACLE_MANUFACTURING_part_3-1 - PINNACLE...

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PINNACLE MANUFACTURING―PART III Following are control risk matrices and related notes that are used to direct a discussion of the requirements of the case. It should be understood that judgment is a critical element in this case, and accordingly, there often is no single right answer. Computer-prepared matrices using Excel (P1045.xls) are contained on the Companion Website and on the Instructor’s Resource CD-ROM, which is available upon request. They are essentially the same as the matrices on the next two pages. 10-1
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10-45 (Continued) PINNACLE MANUFACTURING - Part III Control Risk Matrix – Acquisitions Transaction-Related Audit Objective Internal Controls Recorded acquisitions are for goods and services received (occurrence). Existing acquisition trans- actions are recorded (complete- ness). Recorded acquisition transactions are stated at the correct amounts (accuracy). Recorded acquisition transactions are properly included in the master files, and are properly summarized (posting and summarization). Acquisition transactions are properly classified (classifica- tion). Acquisition transactions are recorded on the correct dates (timing). 1. Required use of PO and receiving report with check of completeness C 2. Proper approval C C 3. Segregation of functions C 4. Cancellation of documents C 5. Prenumbering of documents with accounting for sequence C 6. Internal verification of documents/records C C C C C 7. Use of chart of accounts C 8. Procedures requiring prompt processing C 9. Monthly reconciliation of A/P master file with general ledger C Assessed control risk Low Low Low Low Low Low 10-2 10-23
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10-45 (Continued) PINNACLE MANUFACTURING - Part III
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