A team of municipal auditors is examining street-construction contracts. The team leader is especially concerned that (1)
Question:
A team of municipal auditors is examining street-construction contracts. The team leader is especially concerned that (1) contracts are executed for all construction contracts, (2) contracts are awarded only after receiving at least three bids for each project, (3) the work meets specifications represented in the contracts, and (4) payments are made to the construction firms according to contracted provisions. Following are five pieces of evidence gathered on this audit:
• Copies of a sample of construction contracts that were prepared by the city's legal department and signed by the municipal director of transportation and representatives of the construction companies. The original contracts are kept by the legal department, one copy of each is filed in the Municipal Transportation Office, and another copy is delivered to the construction companies.
• A sample of invoices sent by the contracted firms for payment.
• A sample of cancelled checks made in payment of contracted work.
• A sample of inspection forms prepared by municipal inspectors for particular street projects.
• A sample of bids collected for a number of projects.
Required:
a. Classify the above pieces of evidence according to internal, internal-external, externalinternal, and external evidence.
b. Rank the five according to evidentiary weight.
c. Identify which piece of evidence matches each of the four audit objectives.
Step by Step Answer:
Internal Auditing: Principles And Techniques
ISBN: 9780894131677
1st Edition
Authors: Richard L. Ratliff, W. Wallace, Walter B. Mcfarland, J. Loeboecke