Valuation or To determine if the Enter fictitious payables into the system. Process it using the Allocation amounts recorded for clients system and compare the result with the expected output. accounts payable have Obtain a listing of accounts payable, foot the listing, and agree been recorded it to the general ledger control account. correctly. Trace selected vouchers or vendor accounts to the supporting documents or subsidiary accounts payable records to verify the accuracy of the details. Obtain copies of vendors’ monthly statements and reconcile the amounts to the client’s accounts payable records. Reconcile the daily cash disbursements with posting to the accounts payable subsidiary records. Completeness To determine if all Ask management about control activities used to identify transactions affecting unrecorded payables. accounts payable that Confirm vendor accounts, including accounts with small or zero should have been balances. recorded are recorded. Vouch large monetary items from the purchases journal and cash disbursements journal for a limited time after year-end. Examine the files of unmatched purchase orders, receiving reports, and vendor invoices for any unrecorded payables. Examine and test the client’s procedures for reviewing vendor payments lists. Cut-off To determine if all Compare the date on receiving report with the date on the transactions affecting vendor’s invoice. accounts payable have Compare the date of the invoice with the date they were been recorded in the recorded in the accounts payable journal. correct accounting Tracing dated receiving reports to voucher register entries and period. vouch recorded entries to supporting documentation. AUDIT PROGRAM Cash
Assertion Objective Procedures
Valuation or To determine if the Reconcile the total of electronic cash disbursements transfer Allocation amounts recorded for and the checks issued each day with the daily cash cash have been disbursements report. recorded correctly. Foot the total of the cash disbursements journal and verify if it agrees with the underlying accounting records and the general ledger control account balance. Perform a bank reconciliation and account for any differences. Review the reconciliation of payment transfers with postings to the cash disbursements journal and accounts payable subsidiary records. Enter fictitious disbursements of cash into the system. Click “Pay money to Supplier” button. Enter the details. Process it using the clients system. Go to “Reports” and examine if the dummy transactions are reflected in correct amount. Completeness To determine if all Examine the sequence of checks in the check register. disbursements of cash Ask management about control activities used to identify are recorded. unrecorded disbursements. Vouch large monetary items from the purchases journal and cash disbursements journal. Examine and test the client’s procedures for reviewing vendor payments lists. Existence or To determine if Examine outstanding checks list to determine that checks are Occurrence recorded cash being processed promptly. disbursements have Examine if check issuances contain valid signatures. occurred. Perform a cash count for cash on hand. AUDIT PROGRAM Purchases
Assertion Objective Procedures
Occurrence To determine if The quantity and quality of goods and services received is purchases recorded by documented and agrees with the requisition and performance the entity have expectations such as service level agreements, contract terms, occurred. and vendor performance. Observe and evaluate proper segregation of duties. Test a sample of vouchers for the presence of an authorized purchase order and receiving report. Examine paid vouchers and supporting documents for indication of cancellation. Completeness To determine if all Create dummy purchases. Click “New Purchase Order” and purchases are enter the details. Click “Convert to Purchase Invoice” then recorded. “Update”. Look into the “Purchase Invoices” if the purchases are recorded and updated. Review procedures for accounting for numerical sequence of purchase orders, receiving reports and vouchers. Trace a sample of receiving reports to their vendor invoices and vouchers. Trace a sample of vouchers to the purchases journal. Valuation or To determine if the Recompute the mathematical accuracy of vendor invoice. Allocation amounts recorded for Agree information in the sample of vouchers for product, purchases have been quantity and price. recorded correctly. Examine reconciliation of vouchers to daily accounts payable report. Enter fictitious purchases into the system. Process it using the clients system and compare the result on the “Reports” with the expected output. AUDIT PROGRAM Purchase Discounts
Assertion Objective Procedures
Rights and Obligation To determine if the entity has the right Examine vendor’s invoices for terms of over the purchase discount. the purchase, including the discount rate and the discount period. Valuation or Allocation To determine if purchase discounts Enter dummy purchases with discounts are recorded in the correct amount. and examine if the discounts are stated in the correct amount. Recompute the mathematical accuracy of discounts granted by the vendor. Agree information in the sample of vouchers for product, quantity and price. Completeness To determine if all purchase discounts Obtain a sample of invoices and are recorded. vouchers, and trace to the purchases journal if discounts are recorded. Trace a sample of receiving reports to their vendor invoices and vouchers. AUDIT PROGRAM Purchase Returns and Allowances
Assertion Objective Procedures
Valuation or Allocation To determine if purchase returns and Review the quantity and prices of goods allowances are recorded in the correct returned to vendors. amount. Recompute the mathematical accuracy of allowances and adjustments to purchases. Examine reconciliation of vouchers to daily accounts payable report. Completeness To determine if all purchase returns Review the use and authorization of and allowances are recorded. debit memoranda for purchase returns and allowances. Examine the accounts payable journal if the returns and allowances are reflected. Create fictitious returns and allowances and look into the reports if the returns and allowances are updated. Existence or Occurrence To determine if purchases recorded Observe and evaluate proper by the entity have occurred. segregation of duties. Examine vouchers and supporting documents for indication of cancellation.