Assertion and Related Control Activity - Purchase Transactions

Question 1

Occurrence - Purchase not recorded without approved purchase order and receiving report

Answer 1

Test a sample of vouchers for the presence of an authorized purchase order and receiving report.

Question 2

Occurrence - Accounting for numerical sequence of receiving reports and vouchers

Answer 2

Review and test client procedures for accounting for numerical sequence of receiving reports and vouchers

Question 3

Completeness - Accounting for numerical sequence of purchase orders, receiving reports, and vouchers

Answer 3

Review client’s procedures for accounting for numerical sequence of purchase orders, receiving reports, and vouchers

Question 4

Occurrence - Receiving reports matched to vendor invoices and entered in the purchases journal

Answer 4

Trace a sample of receiving reports to their respective vendor invoices and vouchers.

Question 5

Authorization - Approval of acquisitions consistent with the client’s authorization dollar limits

Answer 5

Review client’s dollar limits authorization for acquisitions

Question 6

Authorization - Approved purchase requisition and purchase order

Answer 6

Examine purchase requisitions or purchase orders for proper approval

Question 7

Authorization - Competitive bidding procedures followed

Answer 7

Review client’s competitive bidding procedures

Question 8

Accuracy - Mathematical accuracy of vendor invoice verified

Answer 8

Recompute the mathematical accuracy of vendor invoice

Question 9

Accuracy - Purchase order agreed to receiving report and vendor’s invoice for product, quantity, and price

Answer 9

Agree the information on a sample of voucher packets for product, quantity, and price

Question 10

Accuracy - Vouchers reconciled to daily accounts payable listing (or daily postings to purchases journal) and then reconciled with postings to accounts payable subsidiary records

Answer 10

Examine reconciliation of vouchers to daily accounts payable report (or reconciliation of entries in purchases journal with entries to accounts payable subsidiary records)

Question 11

Accuracy - Voucher register or accounts payable subsidiary records reconciled to general ledger control account

Answer 11

Review reconciliation of subsidiary records to general ledger control account

Question 12

Cutoff - All receiving reports forwarded to the accounts payable department daily

Answer 12

Compare the dates on receiving reports with the dates on the relevant vouchers

Question 13

Cutoff - Existence of procedures that require recording the purchases as soon as possible after goods or services are received

Answer 13

Compare the dates on vouchers with the dates they were recorded in the purchases journal

Question 14

Classification - Chart of accounts

Answer 14

Review purchases journal and general ledger for reasonableness

Question 15

Classification - Independent approval and review of accounts charged for acquisitions

Answer 15

Examine a sample of vouchers for proper classification