Professional Documents
Culture Documents
Audit of Acquisition
Audit of Sales
And
and Collection
Payment Cycle
Cycle (18)
Receipt
report
Vouche
registe
Paym
doc.
Vend
ment
State
ent
r
ers
Business functions in cycle related to the
document and records.
There are 4 bus. Fun.s involved in the cycle.
1. Processing purchase order; includes
purchase requisition, which is used to
request authorization for goods and
services, purchase order used for the order
after it has been authorized.
2. Receiving goods and services; includes a
receiving reports which are prepared at the
time goods are received.
3. Recognizing Liability : proper recognition
requires prompt and accurate recording.
Documents that may be involved;
Vendor`s invoice; is a doc. From the
vendors that shows the amount owes for
acquisition.
Debit memo; is also from a vendor
showing the reduction in amount owed.
Voucher: a formal means of recording and
controlling acquisitions. (all doc. Put
together) or voucher is simply a file.
Acquisition transaction file:is a computer
generated file including all acquisition
transactions. Name of vendor, date,
amount, account classification , description
and quantity of goods purchased.
Acquisition Journal or Listing : also
referred as a purchase journal. (list of
venders and the amount/balance).
A/P master file; records acquisition, cash
disbursements, return and allowance for
each vendor.
A/P TB: is a list of amount owed each vendor
at point in time.
Vendors` statements: (External Doc.)
prepared monthly by the vendor indicating
the beg. Balance, acquisition, payment, return
and allowance and ending balance.(should
match with the balance in A/P master file).
4. Process recording cash disbursement: the
payment of the liability is the significant activity
of all business. Doc.s that the auditor examine
associated with this activity are;
Check: document used to pay acquisition;
it may be paper or electronic fund
transfer(EFT).
Cash disbursement transaction File; is a
computer generated file that includes all
cash disbursement transaction processes
during the period.
Cash disbursement journal or listing;
includes all disbursement transactions for
a period.
The ff table show a general overviw
Objectives of audit of A/P & purchase.
To substantiate the existence of the of
recorded A/P & occurrence of purchase.
To examine the completeness of A/P &
purchase transaction.
To Determine the clients obligation to pay the
recorded A/P.
Determine that the valuation of A/P is in
accordance with IFRS.
Determine the appropriateness of the
presentation & Disclose.
Internal Controls over the purchase process
End of chapter 4
UNIT FIVE