cpa audit ch7 review 2

No --- The auditor should be least concerned that the checks are signed by only one person if that person is not assigned other incompatible functions, and proper documentation is required before signing.

No --- Checks for disbursements should be signed by a responsible person in the cash disbursements department after necessary supporting evidence has been examined. This individual therefore should be responsible for canceling the supporting documentation after payment.

Subjecting credit card charges to the same expense controls as those used on regular company expense forms.

Credit card charges should be controlled in much the same manner as expense accounts and other expense reports, including use of limitations on specific kinds of expenditures. These charges should be compared with supporting documentation, such as receiving reports and invoices.

Using test data to verify the performance of edit routines.

The test data approach uses the computer to test the processing logic and controls within the system and the records produced. The auditor prepares a set of dummy transactions specifically designed to test the control activities that management claims to have incorporated into the processing programs. The auditor can expect the controls to be applied to the transactions in the prescribed manner. Thus, the auditor is testing the effectiveness of the controls over the payroll data.

• -Determining the mathematical accuracy of the vendor’s invoice.
• -Having an authorized person approve the voucher.
• -Matching the receiving report with the purchase order.