cpa audit ch 7 review 6

Permits EDI transactions to be sent to trading partners as transactions occur.

VAN services have typically used a proprietary network or a network gatewayed with a specific set of other proprietary networks. A direct Internet connection permits real-time computer-to-computer communication for client-server applications, so transactions can be sent to trading partners as they occur.

Control and distribution of unclaimed checks.

If wages are not directly deposited into employees’ bank accounts, paper checks must be physically distributed by the cash disbursements function. Any unclaimed checks should be turned over to an appropriate custodian for safe storage. Accordingly, the test data approach does not apply to the control and distribution of unclaimed checks. It is a method of testing computerized controls by processing dummy transactions, some of which should result in error listings.

Periodic physical inspection of plant and equipment by the internal audit staff.

A periodic physical inspection by the internal audit staff is the best activity for verifying the existence of plant and equipment. Direct observation by an independent, competent, and objective internal audit staff helps to reduce the potential for fictitious acquisitions or other fraudulent activities. The result is a lower assessment of the RMMs.

control deficiency

.Are an approved purchase requisition and a signed purchase order required for each purchase?

Are all goods received in a centralized receiving department and counted, inspected, and compared with purchase orders on receipt?

Are prenumbered purchase orders and receiving reports used and accounted for?