Key Controls| Transaction-Related Audit Objective| Test of Control| Substantive Test of Transaction| 1. Segregation of the purchasing, receiving, and cash disbursements functions.| Job responsibilities are correctly divided amongst personnel (classification).| Employ different personnel and have sign offs to ensure that no one person is performing multiple functions to prevent any types of fraud.| Trace a purchase order (PO) from fulfillment to initiation to determine if the proper stakeholders approved the PO and if the order was fulfilled correctly.| 2. Independent reconciliation of the monthly bank statements| Compare accounts for discrepancies (posting and summarization).| Examine and ensure that all in house and bank data coincides to prevent and /or correct possible errors.| Obtain originals of the statements pertaining to six months of the audit period and reconcile. Compare the reconciliation with the one on file. Confirm who completed the independent reconciliation and his/her credentials.| 3. Use of pre-numbered voucher packages, properly accounted for| Voucher packages are correctly classified (classification).| Voucher packages will be organized in advance so that there is no or less confusion and more efficiency.| Trace selected group of pre-numbered vouchers back to the tracking log| 4. Use of pre-numbered checks, properly accounted for| Checks are correctly classified (classification).| Checks will be organized in advanced so that there is no or less confusion and more efficiency.| Trace selected group of pre-numbered cashed checks back to the journal| 5. Use of pre-numbered receiving reports, properly accounted for| Receiving reports are correctly classified (classification).| Receiving reports will be organized in advance so that there is no or less confusion and more efficiency.| Trace selected group of pre-numbered receiving reports back to file log| 6. Internal verification of document package before check preparation| Checks prepared according to document packages (accuracy).| Document packages will be examined before preparing checks to ensure correct check amounts and only when required.| Obtain copies of selected group of cashed checks and trace them back to their respective document package. Verify that there is a checklist included on the document package and that there are no documents missing.| 7. Review of supporting documents and signing of checks by an independent, authorized person| Documents reviewed and checks signed (accuracy and completeness).| Supporting documents will be checked for correctness and checks will be only be issued by designated persons.| Obtain copies of selected group of cashed checks and verify signatures; then trace signatures/individual to company’s signature authority matrix.| 8. Cancellation of documents prior to signing of the check| Documents cancelled in timely fashion (timing).| Documents will need to be discontinued before checks are authorized.| Obtain copies of selected group of cashed checks and trace their respective document packages. Verify that all documents were canceled prior to signing the checks.| 9. Monthly reconciliation of the accounts payable master file with the general ledger| Compare accounts payable postings for equality.| The accounts payable account will be tested for errors between prior and current recordings.| Trace selected monthly totals from the accounts payable monthly master file to the general ledger.|
Acquisitions Substantive Tests of Transactions
Objectives| Audit Procedure| Test of Transaction|
Occurrence| Examine invoices, receiving reports, purchase orders, and purchase requisitions for initials of accounts payable clerk| Examine select invoices, receiving reports, purchase orders and purchase requisitions for accuracy and proper verification| Completeness| Account for the sequence of purchase orders, receiving...