II.An opportunity to carry out the fraud.III.An attitude or rationalization that justifies the fraudulent action.Which of the following statements is true? a.I is a fraud risk factor.b.I and II are fraud risk factors.c.II and III are fraud risk factors.d.None of these is a fraud risk factor.e.I, II, and III are fraud risk factors. 6.48Tests of Controls over Cash Disbursements.The Runge Controls Corporation manufactures and markets electrical control systems: temperature controls, machine controls, burglar alarms, and the like. The company acquires electrical and semiconductor parts from outside vendors andassembles systems in its own plant. The company incurs other administrative and operating expenditures. Liabilities for goods and services purchased are entered in a vouchers payable journal, at which time the debits are classified to the asset and expense accounts to which they apply. The company has specified control activities for approving vendor invoices for payment, for signing checks, for keeping records, and for reconciling the checking accounts. The procedures appear to be well specified and in operation.You are the senior auditor on the Runge engagement and need to specify a list of test of control procedures to evaluate the effectiveness of the controls over cash disbursements.Required: Using management's assertions over transactions as a guide, specify two or more tests of controlprocedures to audit the effectiveness of typical control activities. (Hint:From one sample of 8
recorded cash disbursements, you can specify procedures related to several objectives. See Exhibit 6.4 for examples of test of control procedures over cash disbursements.) Organize your list according to the following example for the “completeness” assertion. (AICPA adapted) 6.50 Test of Controls over Cash Receipts. You are the in-charge auditor examining the financial statements of the Gutzler Company for the year ended December 31. During late October, with the help of Gutzler's controller, you completed an internal control questionnaire and prepared the appropriate memoranda describing Gutzler's accounting procedures. Your comments relative to cash receipts are as follows: All cash receipts are sent directly to the accounts receivable clerk with no processing by the mail department. The accounts receivable clerk keeps the cash receipts journal, prepares the bank deposit slip in duplicate, posts from the deposit slip to the subsidiary accounts receivable ledger, and mails the deposit to the bank. The controller receives the validated deposit slips directly (unopened) from the bank. She also receives the monthly bank statement directly (unopened) from the bank and promptly reconciles it. At the end of each month, the accounts receivable clerk notifies the general ledger clerk by journal voucher of the monthly totals of the cash receipts journal for posting to the 9
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- Fall '11
- CASH RECEIPTS JOURNAL