Term
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Definition
Separation of asset custody from other functions
-Control over purchased assets separate from recording
-Control over cash separate from recording
Timely recording of and independent review of Transactions
-Comparison of PO, Receiving Report, and Invoice
Payments are properly Authorized
-Checks signed by authorized person independent of A/P
-Supporting documents cancelled after payment
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Term
What steps are typically involved in a purchases transaction?
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Definition
User department requisitions goods
-Purchasing orders the goods (via PO) from vendor
-Receiving dept. receives, counts, and inspects the goods and prepares a receiving report
-A/P dept. prepares voucher after matching RR, PO, requisition, and invoice
-Record A/P and purchase
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Term
1. Purchases are authorized as to the:
Quantity:
Vendor
Prices
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Definition
1. Examine sample of vouchers and trace to purchase requisition for evidence of approval.
Inquire about authorization limits.
For a sample of vouchers, trace to purchase requisition and compare purchase amounts with authorization limits.
Inspect the approved vendor list.
For sample of vouchers, trace to invoice and PO and compare to approved vendor list.
For sample of vouchers, trace to invoice and compare price billed with approved price.
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Term
Separation of Duties: Custody of purchased assets is separate from recording
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Definition
Inquire/Observe regarding conflicting duties (in receiving & accounting)
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Term
Prenumbered documents are used and series is accounted for periodically for (Purchase Requisition, PO, Receiving Report, Voucher)
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Definition
Examine prenumbered documents and inquire regarding accounting for the sequence
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Term
Goods are counted and inspected upon arrival
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Definition
Observe/Inquire receiving procedures on surprise basis and trace sample of vouchers to RR looking for indication of count and inspection.
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Term
RR, PO and Invoice are matched
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Definition
-Take sample of vouchers and verify that quantity billed = quantity received and ordered
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Term
Internal verification of invoice amounts
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Definition
For sample of vouchers, trace to invoice and reperform footing and cross-footing of the invoice
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Term
What steps are typically involved in a payment transaction?
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Definition
-Cash disbursements (treasury) processes vouchers for payment (prepares check)
-Treasurer signs checks and cancels the voucher package and check gets mailed
-record payment
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Term
Separation of Duties: cash (check signer) separate from recording
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Definition
Inquire and observe check signers about conflicting responsibilities
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Term
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Definition
Inq/Obs that supporting documents are reviewed before checks are signed.
Examine a sample of payments for indication of approval
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Term
Prenumbered checks are used
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Definition
Examine prenumbered checks and inquire about accounting for sequence
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Term
Documents are cancelled to prevent reuse
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Definition
Examine sample of vouchers for evidence of cancellation
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Term
Internal verification that check amount agrees with invoice amt
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Definition
Examine sample of payments for evidence of verification (or reperform)
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Term
Monthly bank reconciliation is performed by independent person
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Definition
Inq/Obs. Bank reconciliation process.
Examine sample of bank reconciliations
Reperform a bank rec.
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