L16 notes_Part_6 - accounts. All checks and purchase orders...

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© W.R. Knechel P3: Controls over Accounts Payable In your audit of Faye Co., management gives you the following (partial) list of internal controls over accounts payable: The check approving and preparation duties are performed by separate individuals. Checks of more than $1,000 require the treasurer's signature whereas those for less are produced mechanically using a signature plate stored in the treasurer's safe. Before a check is prepared, the purchase order/check request is matched against the invoice. Control totals from the check register are compared to those from the cash disbursements journal after every batch of transactions is completed. Management maintains a master vendor list. No check may be written to a vendor not on the list without approval from the controller. All disbursement accounts are independently reconciled with exceptions followed up promptly. Faye Co. uses hash totals to ensure that expenditures are charged to the proper
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Unformatted text preview: accounts. All checks and purchase orders are prenumbered. W.R. Knechel P3: Controls over Accounts Payable In your test of controls, you find the following: a. Upon vouching some of the canceled checks with their supporting documents, you find that one $1,800 check matches the invoice amount but is $100 more than the purchase order listed. b. A large number of the checks were written to vendors who required special approval as they were not on the approved list. c. Four checks written for more than $1,000 did not carry the treasurer's signature. All were written for less than $1,500, and no other problems were identified. d. One invoice had been paid twice. e. Two checks were missing from the listing of checks cleared. Upon investigation, they were found to have been destroyed in the check-writing machine. f. One expenditure was posted to the wrong expense account....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L16 notes_Part_6 - accounts. All checks and purchase orders...

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