Pinnacle Manufacturing: Part V
A.B and C
|No. | Key Internal Control |Transaction Related Audit Objectives | Test of Control |Substantive Test of Transaction | |1. |Segragation of the purchasing, receiving | Recorded cash payments are for goods and services actually |Adequate segragation of duties and |Trace the entries in the acquisitions journale to | | |and cash payment functiions |received. |observe activities. |related vendor’s invoice, rerports and purchase orders.| | | |(existence or occurence) |Discuss with personnel and observe | | | | | |activities. | | |2. |Independent reconciliation of the monthly |Existing cash payment transactions are recorded (completeness) |Examine Bank reconciliation and |Reconcile recorded cash payments with the cash payments| | |bank statments. | |observe their preparation. |on the bank statement. | | |Use of prenumbered document packages, |Existing transaction are recorded (completeness) |Account for a sequence of document |Examine supporting documents as a part of tests of | |3. |properly accounted for | |packages. |acquisitions | |4. |Use of prenumbered cheques, properly |Existing cash payment transanction are recorded. |Account for a sequence of cheques. |Reconcile recorded cash payment with the cash payment | | |accounted for. |(completeness) | |on the bank statment. Prepare a proof of cash payments | | |Use of prenumbered receiving reports, |Existing acquisition transaction are recorded (completeness) |Account for a sequence of receiving |Trace from a file to receiving reports to the | |5. |properly accounted for. | |reports. |acquistions journal. | |6. |Internal verification of document package |Recorded payments are for goods and services actually |Examine document package for |Examine supporting documents for properly and | | |before cheque preparation |received. (existence or occurence). |indication of internal verification. |recomputed information on the supporting documents. | | | |Recorded cash payment are accurate. (accuracy) | | | | | |Payment transactions are properly included in the accuounts | | | | | |payable master file and are properly summarised. (posting and | | | | | |summerisation). | |...
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