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# a. Key Internal Control b. Transaction Related Audit Objectives c. Test of Control d. Substantive Test of Transaction
1.
Segregation of the purchasing,
receiving, and cash disbursements
functions.
Recorded acquisitions are for goods and services
actually received (occurrence).
Discuss segregation of duties
with personnel and observe
activities.
Trace entries in the acquisitions journal to related
vendors' invoices, receiving reports, and purchase
orders.
Recorded cash disbursements are for goods and
services actually received (occurrence).
2.
Use of prenumbered voucher
packages, properly accounted for.
Existing acquisition transactions are recorded
(completeness).
Account for a sequence of
voucher packages.
Trace from a file of vendors' invoices to the
acquisitions journal.
3.
Use of prenumbered checks,
properly accounted for.
Existing cash disbursement transactions are
recorded (completeness).
Account for a sequence of
checks.
Reconcile recorded cash disbursements with the cash
disbursements on the bank statement (proof of cash
disbursements).
4.
Use of prenumbered receiving
reports, properly accounted for.
Existing acquisition transactions are recorded
(completeness).
Account for a sequence of
receiving reports.
Trace from a file of receiving reports to the
acquisitions journal.
5.
Internal verification of document
package before check preparation.
Recorded acquisitions are for goods and services
actually received (occurrence).
Examine document package
for indication of internal
verification.
Examine supporting documents for propriety and
recompute information on the supporting documents.
Recorded acquisitions are stated at the correct
amounts (accuracy).
Acquisition transactions are properly included in the
master files, and are properly summarized (posting
and summarization).
Acquisitions are properly classified (classification).
Acquisitions are recorded on the correct dates
(timing).
6.
Review of supporting documents and
signing of checks by an independent,
authorized person.
Recorded cash disbursements are for goods and
services actually received (occurrence).
Examine checks for signature.
Trace the cancelled check to the related acquisitions
journal entry and examine for payee name and
amount.
7.
Cancellation of documents prior to
signing of the check.
Recorded acquisitions are for goods and services
actually received (occurrence).
Examine indication of
cancellation.
Examine the acquistions journal for duplicate entries
to a vendor.
8.
Monthly reconciliation of the
accounts payable master file with the
general ledger.
Acquisition transactions are properly included in the
master files, and are properly summarized (posting
and summarization).
Inquire of client about monthly
reconciliation procedures.
Foot acquisitions and cashdisbursements journals
and trace postings to the general ledger and accounts
payable and inventory master files.
Cash disbursement transactions are properly
included in the master file, and are properly
summarized (posting and summarization).
9.
Independent reconciliation of the
monthly bank statements.
Existing cash disbursement transactions are
recorded (completeness).
Examine file of completed bank
reconciliations.
Reconcile recorded cash disbursements with the cash
disbursements on the bank statement (proof of cash
disbursements).
Recorded cash disbursement transactions are
stated at the correct amounts (accuracy).
