QUESTION a.TRANSACTION b.TEST OF c.POTENTIAL d.

SUBSTANTIVE
RELATED AUDIT CONTROL MISSTATEMENT(S) PROCEDURE
OBJECTIVE(S)
1 Recorded Observe and Goods received and Vendor statement
acquisitions and inquire not recorded or reconciliation.
payments are for about recorded and not
goods and services personnel received. Review of physical
received, consistent performing inventory
with the best purchasing, Disbursements made shortages.
interests of the shipping, for goods not
client (occurrence). payables received.
and
disbursing
functions.
2 Acquisitions are observe and Late recording or Vendor statement
recorded on the inquire non-recording of reconciliation.
correct dates about the liabilities to suppliers.
(timing). procedure Search for
performed unrecorded
Existing by mail liabilities.
acquisitions are clerk.
recorded
(completeness). Compare
date mail is
received to
date
accounting
received
invoices
3 Existing Account for Receiving reports are Vendor statement
acquisitions are numerical misplaced and reconciliation.
recorded sequence of acquisitions not
(completeness). receiving recorded.
reports and
determine
that all were
recorded.
4 Acquisitions are Examine Acquisitions from Test extensions,
recorded at the cancelled vendors are recorded footings,
proper amounts invoices for at improper amounts. discounts, and
(accuracy). indication of freight terms on
checking for vendors' invoices.
clerical
accuracy.
 5 Acquisition Examine Acquisitions are Examine
transactions are indication of recorded in the wrong supporting invoice
properly classified approval. account. for reasonableness
(classification). of accounting
distribution.
6 Payments are Observe Checks are disbursed Examine checks
recorded on the whether the and not recorded. clearing the bank
correct dates system prior to year-end to
(timing). automaticall determine that they
y posts were recorded in
Existing payments checks the cash
are recorded when they disbursements
(completeness). are journal prior to
prepared. yearend.
7 Acquisitions are for Examine Invoices are recorded Examine vendor
goods and services invoices for and paid more than statements, noting
received, consistent which once. any unrecorded
with the best checks have payments
interests of the been appearing on the
client (occurrence). disbursed to statement.
determine
that they
have been
cancelled.
8 Recorded cash Observe and Checks are disbursed Trace checks to
disbursements are inquire and no merchandise is supporting invoice
for goods and about the received. and determine
services actually handling of reasonableness of
received checks from Checks are received expenditure.
(occurrence). the time by other than the
they are supplier for whom Reconcile vendors’
mailed to they are intended. statements.
suppliers.