During the audit of Talbot Company, the auditor found a purchase from a vendor that was not on the
approved list of vendors. This was considered an unusual type of transaction. The auditor advised the controller about this transaction who explained that the transaction was small manufacturer of odd parts that other suppliers cannot provide.
The controller told the auditor that he was aware of the transaction, but that he did not tell anyone about it as he did not want to cause trouble for the employee who had mistakenly made the purchase. He stated that the former purchasing manager who had authorized the purchase was now retired, so the problem would never happen again.
Required
Clearly identify and explain the matters that should be communicated to the audit committee.
Answer:
The purchase or buy from the unapproved merchant is non-adherence to the organization policies, yet anyway controller has information on the transaction as it was bought by employee and it was approved by the resigned purchase administrator.
Presently the auditor needs to check for the materiality of deviation in the cost of the part whenever bought from different providers. Be that as it may, controller was clarified as it was unavailable from different providers.
Anyway auditor can compare at the cost of those parts in the market and in the event that he finds that there was a material deviation from advertise cost or market price by considering all the conditions if any can conclude up as needs be and make a move or take action of reporting to audit committee.
In the event that there is no material deviation, auditor can disclose the audit committee to go into a contact promptly for acquisition of the odd parts so merchant gets approved.
During the audit of Talbot Company, the auditor found a purchase from a vendor that was...
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