Purchase & payment cycle Flashcards
What’s the control activity, audit procedure & objective for,
“ Purchase requisitions are signed/approved by authorised personnel. This is to ensure that goods and services are purchased for authorised company purchases and to avoid excessive or unnecessary items.”
Proper procedures for authorization
Review purchase requisitions for evidence of supervisory approval ( ie initials/signature)
Existence
What’s the control activity, audit procedure & objective for, “Purchase requisitions are pre-numbered and accounted for on a regular basis.”
Adequate documents & records
Account for the numerical sequence of purchase requisitions to ensure no duplicate items or missing items.
Completeness / Existence
What’s the control activity, audit procedure & objective for, “Purchasing officer checks that the purchase requisition has been signed by an authorised officer to ensure that it is a valid company purchase.”
Independent internal verification
Trace purchase orders to purchase requisitions to ensure an approved purchase requisition exists for all orders.
Existence
What’s the control activity, audit procedure & objective for, “Purchase orders are pre-numbered and accounted for on a regular basis.”
Adequate documents & records
Account for the numerical sequence of the purchase orders to ensure no missing or duplicate items.
Existence / Completeness
What’s the control activity, audit procedure & objective for “Purchase orders are supported with quotations obtained from suppliers to ensure that the goods are ordered from supplier who provides the goods at the best price, quality and delivery.”
Adequate documents and records
Review purchase orders to check whether the purchase is supported by a valid quotation from the supplier.
Amounts larger than normal market price may indicate existence of related-party transactions / kickbacks.
Existence
What’s the control activity, audit procedure & objective for “Purchase orders are signed/approved by authorised personnel. This is to ensure that goods and services are purchased for authorised company purchases and to avoid excessive or unnecessary items.”
Proper procedures for authorization
Review purchase orders for evidence of supervisory approval or authorization ( ie signature / initials)
Existence
What’s the control activity, audit procedure & objective for
“Blank purchase orders are safeguarded and accounted for periodically.”
Physical control over assets
Observe to ensure physical controls over blank purchase orders.
Existence
What’s the control activity, audit procedure & objective for
“Goods received are compared with the purchase order (which authorises the receiving department to accept the goods) and the supplier’s delivery order to ensure quantity and descriptions match. (Three-way matching)”
Independent internal verification
Trace receiving reports with purchase order and supplier’s delivery order to ensure that all goods received were actually ordered
Existence & Accuracy
What’s the control activity, audit procedure & objective for “Goods received are examined to ensure that they are in good condition.”
Independent internal verification
Review receiving report for evidence that goods were counted and examined
Existence & Accuracy
What’s the control activity, audit procedure & objective for “Receiving reports are pre-numbered and properly accounted for.”
Adequate documents and records
Account the numerical sequence of the receiving reports to ensure that there are no missing or duplicate items
Existence / Completeness
What’s the control activity, audit procedure & objective for “Received goods are kept under strong physical and access controls.”
Physical control over assets
Observe storage security to ensure that there are adequate controls over goods
Existence
What’s the control activity, audit procedure & objective for “Invoices received are assigned voucher numbers and recorded in the voucher register to ensure that all invoices are accounted for.”
Adequate documents & records
Account for the numerical sequence of the invoices to ensure no missing or duplicate items.
Existence / Completeness
What’s the control activity, audit procedure & objective for “Invoices are compared with purchase orders and receiving reports before payment to ensure the purchase was authorised and that goods have actually been received and that quantity and description ties. (Three-way matching)”
Independent internal verification
Trace invoice with purchase orders, purchase requisitions and receiving reports to ensure that it’s a valid transaction whereby quantity and description is accurate.
Existence & Accuracy
What’s the control activity, audit procedure & objective for “Description, quantity, types and prices are checked to ensure proper accurate recording. Extensions and footings on invoices are also verified.”
Independent internal verification
Review documents for existence of independent internal verifications (ie tick marks)
Accuracy
What’s the control activity, audit procedure & objective for “Codes are checked against a chart of accounts to ensure proper classification.”
Independent internal verification
Examine for indication of internal verification
Classification
