Reduces the opportunity for fraud by segregating the authorization to purchasefrom the custody and recording functionsiv.
Centralizes control in one functionb.
The most important control is an authorized vendor database.c.
Prenumbered forms are used to establish the uniqueness of each order and thecompleteness of the purchase order population.d.
Purchase order is used by receiving department to determine whether a shipment of goods should be accepted. The accounting department uses the purchase order todetermine whether a purchase was authorized and wh
ether the vendor’s invoice is
Receipt of and accounting for, goods and servicesa.
Prenumbered receiving documents- completenessb.
Electronically scans bar codesc.
Departments may receive goods directlyd.
Goods are received directly into the production process4.
Approval of items for paymentsa.
Three way match among the vendor invoice, the purchase order and the receivingreport.b.
Internal control should assure that all items are recorded in a timely manner that theauthorization process includes a review of documents and the supportingdocumentation is canceled on payment to avoid duplicate payment.c.
Restricted access(vendor and purchasing database)iii.
Reconciliations inherent in the processv.
Automation of error-prone activitiesvi.
Restricted access to transferring fundsvii.
Review the completeness of the documentations and cancel supporting documents toavoid duplicate payments.
Substantive tests of accounts payablea.
The major concern with accounts payable is that the account will be understated.b.
The most relevant serration is the completeness assertion.c.
If there is little risk, the testing might be limited to substantive analytical procedures,such as a comparison of underlying expenses with that of the prior year and relatedtests of the underlying asset or liability account.d.
If there is material weakness in internal control