06 -- Internal Control—Purchases-Payables-Cash Disbursements Cycle

06 -- Internal Control—Purchases-Payables-Cash Disbursements Cycle

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CPA AUDITING - STUDY UNIT 6 Internal Control Purchases-Payables-Cash Disbursements Cycle: Core Concepts A. Purchases-Payables-Cash Disbursements Cycle. Management is responsible for the establishment of controls to ensure proper authorization of purchases; ordering the proper quality and quantity of goods on a timely basis; acceptance only of goods that have been ordered; receipt of proper terms and prices from the vendor; payment only for those goods and services that were ordered, received, and properly invoiced; and payment on a timely basis (e.g., to take advantage of cash discounts). 1. Relevant functions in this cycle include inventory control, purchasing, receiving, warehousing, accounts payable, cash disbursements, and the general ledger. The organizational structure should separate duties and responsibilities so that an individual is not in the position both to perpetrate and conceal errors or fraud. Authorization of a transaction, recording of the transaction, and custody of assets associated with the
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06 -- Internal Control—Purchases-Payables-Cash Disbursements Cycle

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