Lakeside Company

Inventory Purchases and Cash Disbursements Transactions

December 31, 2007

Audit document No.

Prepared by:
Reviewed by:
Reviewed by:

Purchase Receiving
Requisition Report Invoice Check Audit
Date Vendor Number Number Number Number Procedures
8/20/07 Cypress Products 6702 3918 711 3091     ø t u G
8/21/07 Cypress Products 6703 3919 802 3121     ø t u C G
8/24/07 Cypress Products 6704 3920 911 3164     ø t u G
8/27/07 Cypress Products 6705 3921 1261 3203     ø t u B E F G
8/28/07 Cypress Products 6706 3922 1313 3251     ø t u G
9/2/07 Cypress Products 6707 3923 1406 3310     ø t u B D F G
9/3/07 Cypress Products 6708 3924 1510 3345     ø t u E F G
9/7/07 Cypress Products 6709 3925 1616 3397     ø t u C G
9/8/07 Cypress Products 6710 3926 1691 3425     ø t u A B G
9/14/07 Cypress Products 6711 3927 1912 3451     ø t u B G
9/16/07 Cypress Products 6712 3928 2073 3471     ø t u C E G
9/21/07 Cypress Products 6713 3929 2149 3510     ø t u G
Audit Objectives:
 To verify that all merchandise were properly ordered and received
 To verify that all documents are in agreement to quantity and description of goods
 To verify that cash disbursements are for legitimate commitments and properly recorded.

Scope:
(a) Population – All purchases from Cypress Products.
(b) Sample –Selected 12 receiving reports located in the Inventory Department .

Audit Procedures:
 Reviewed documents for completeness and authorization. All complete and signed except A.
 Verified acquired item if properly recorded in the inventory purchases journal. All agreed.
 Verified the agreement between receiving report, vendor invoice and purchase requisition as to quantity of goods and
description of acquired merchandise. All documents were compared and verified to be in agreement except for B.
 Verified each requisition have been approved by the proper company officials. All purchase requisition were properly
approved by Rogers except C.
Ø Noted that prices have been checked, extended, and footed. All were except D.
t Reconciled the prices on the invoice to the Master Price List found in the Controller’s Division. All agreed except E.
U Examined the cancelled checks, had matched the dollar amounts and recomputed the 3% discount. All agreed except F.

Comments:
A– Receiving report was not on file. Lakeside should find it or provide a reason for its absence. Unless it is accounted for, it may
need further testing.
B– Purchase requisitions does not agree with receiving reports for some items and the quantity. The client paid only for ordered
goods, not goods received. An item in purchase requisition 3923 and 3927 were replaced by another item and it was
accepted by Lakeside.
C- Three requisitions were signed instead by Miller, instead Rogers.
D– A vendor invoice has not been extended and footed.
E– Prices on the purchase requisitions was not the same on the Master Price List. Purchase requisition 6705 were recorded at
$24. 95 where it should $32. Purchase requisition 6708 were recorded at 25.98 and 87.95 where it should be 32.30 and
96.95, respectively. Purchase requisition 6712 were recorded at 79.95 but should be 88.97. There were understated, so the
client probably get special discounts, but it needed more evidence.
F– Invoice 1261 was discounted at 4%. Check 3345 was understated by $1864.34.
G- Lakeside took discount in every purchase in spite of overdue in credit terms. Further inquiry is required to determine if still
has a liability for these amounts.

Audit Conclusion:
Further testing necessary because of the exceptions needed.