Chapter 11: Auditing the Purchasing Process

Question 1

What audit procedures could be used as part of the search for unrecorded liabilities?

Answer 1

1. Ask management about control activities at the end of an accounting period
2. Vouch large-dollar items from the purchases journal and cash disbursement journal for a limited time after year-end; examine the date on each receiving report or vendor invoice to determine if the liability relates to the current audit period
3. Examine the files of unmatched purchase orders, receiving reports, and vendor invoices for any unrecorded liabilities

Question 2

What assertion is being tested with the search for unrecorded liabilities?

Answer 2

Completeness

Question 3

Where do we make our selections for the search of unrecorded liabilities?

Answer 3

Subsequent cash payments