(Objective 18-3) The following audit procedures are included in the audit program for the audit of the financial statements of Golden State Overnight Express:
1. Select a sample of acquisitions from the acquisitions journal and perform the following:
a. Vouch the transaction to the voucher package that includes the matched receiving report, purchase order, and vendor invoice.
b. Verify that the purchase order was approved by an authorized purchasing agent.
c. Verify that the initials of accounts payable clerk are present, indicating that the documents have been appropriately matched and that amounts on the vendor invoice were verified.
d. Recalculate the invoice amount and compare the dollar amounts per the invoice to the amount recorded in the acquisitions journal.
e. Examine whether the transaction was recorded to the correct vendor in the accounts payable master file.
f. Determine if the transaction was recorded in the correct month, based on when the goods were received and the terms of the transaction.
g. Review the chart of accounts to determine if the transaction was charged to the appropriate general ledger account.
2. Discuss with the accounts payable personnel the nature of procedures they perform when matching acquisitions documentation and discuss the types of discrepancies they typically find and how those are resolved.
3. Scan the acquisitions journal for any unusual entries and investigate those noted.
4. Foot the acquisitions journal for two months of the year and determine that amounts were correctly recorded in the general ledger accounts.
5. Trace a sample of voucher packages to the acquisitions journal throughout the year to determine that the transaction is included in the acquisitions journal.
For each of the above procedures (consider 1.a. through 1.g. as separate procedures), perform the following:
a. Identify the type of audit evidence used for each procedure.
b. Identify the transaction-related audit objective(s) satisfied by each procedure.
c. Identify whether the procedure is a test of control or substantive test of transaction.
Objective 18-3
Understand internal control, and design and perform tests of controls and substantive tests of transactions for the acquisition and payment cycle.
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