The following questions concern internal controls in the acquisition and payment cycle. Choose the best response.
a. An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substan-
tive audit procedure most likely was to
(1) identify unusually large purchases that should be investigated further.
(2) verify that cash disbursements were for goods actually received.
(3) determine that purchases were properly recorded.
(4) test whether payments were for goods actually ordered.
b. Which of the following questions would be best to include in an internal control
questionnaire concerning the completeness assertion for purchases?
(1) Is an authorized purchase order required before the receiving department can
accept a shipment or the vouchers payable department can record a voucher?
(2) Are purchase requisitions prenumbered and independently matched with ven-
dor invoices?
(3) Is the unpaid voucher file periodically reconciled with inventory records by an
employee who does not have access to purchase requisitions?
(4) Are purchase orders, receiving reports, and vouchers prenumbered and periodi-
cally accounted for?
c. Mailing disbursement checks and remittance advices should be controlled by the person who
(1) approves the vouchers for payment.
(2) matches the receiving reports, purchase orders, and vendors invoices.
(3) signs the checks last.
(4) maintains control over a mechanical check-signing machine.
