Examine supporting invoices and recheck items checked

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Examine supporting invoices and recheck items checked by the clerk. 4. Recorded transactions exist. (Occurrence)* Examine invoices for the controller's initials. Examine supporting invoices for same information examined by the controller. 5. Recorded transactions exist. (Occurrence) Examine invoices for indication of check number and date. Examine supporting invoices, purchase orders, and receiving reports containing the proper check number and date for each cash disbursement. * The objectives satisfied depend upon what she examines. She might, for example, examine supporting documents for accuracy and even for account classification. In that event, those two objectives would be added.
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13-28 (a) CONTROL ACTIVITY (b) TRANSACTION- RELATED AUDIT OBJECTIVE(S) (c) TEST OF CONTROL (d) POSSIBLE MISSTATEMENT (e) SUBSTANTIVE AUDIT PROCEDURE 1. Separation of duties Occurrence Observe check mailing procedures and inquire about normal procedures Bookkeeper takes signed check and changes payee name Compare payee name on cancelled check to supporting documents 2. Adequate documents or records Occurrence Examine supporting documents for indication of cancellation Duplicate payment for an acquisition Examine supporting documents for every payment to selected vendors 3. Independent checks on performance Occurrence Accuracy Examine vendors' invoices for indication of comparison Invalid or unauthorized payment Examine supporting documents for appropriateness of expenditures 4. Independent checks on performance Accuracy Examine vendors' invoices for indication of recalculation A misstatement in calculation of a vendor's invoice Recalculation of vendors' invoices 5. Proper authorization Occurrence Examine approved purchase orders for a sample of acquisitions Unauthorized acquisitions of goods Examine supporting documents for appropriateness of expenditures 6. Adequate documents or records Occurrence Completeness Account for a numerical sequence of receiving reports Unrecorded acquisitions exist Confirm accounts payable, especially vendors with small or zero balances 7. Independent checks on performance Timing Examine vendors' invoices for indication of comparison Cutoff misstatements Perform search for unrecorded liabilities 8. Independent checks on performance Posting and summarization Examine indication of reconciliation of the master file and control account Misstatements in master file or control account Foot subsidiary records and compare to control account 9, Independent checks on performance Classification Examine vendors' invoices for indication of internal verification Account classification misstatements Compare vendors' invoices to acquisitions journal for reasonableness of account classification 10. Proper authorization Occurrence Examine cancelled checks for signature Invalid or unauthorized payment Examine supporting documents for appropriateness of expenditures 13-11 13-11
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13-29 a. 1. Automated control embedded in computer software 2. Manual control whose effectiveness is based significantly on
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  • Spring '08
  • Brady,J
  • Controls, substantive tests

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