Management and Organizational Studies 3363A/B Chapter Notes - Chapter 16: Purchase Order, Audit Risk, Cheque
8 Dec 2014
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Document Summary
Chapter 16 audit of the acquisition and payment cycle. Involves the decisions and processes necessary for obtaining the goods and services for operating a business. Typically begins with the initiation of a purchase requisition by an authorized employee who needs the goods or services. Risk of inadequate disclosure or incorrect f/s: omitting disclosure of related party transactions, omitting disclosure of contingent liability, incorrect disclosures relating to various components of pp&e, incorrect and confusing information disclosed about vendor allowances. Functions in the cycle, related documents and records, and internal controls. Test of controls for acquisition and payment cycle. Test of acquisitions: test of payments, uses business functions 1 4 (above, uses business function 5 (above) Auditor must document, evaluate and determine effect of new controls on. New audit procedures may need to be designed e. g. create test transactions to determine that programs are functioning as intended: auditing the data conversion process.
