2. Are vendor's invoices matched with receiving reports before they are approved for payments?" equired: a. Describe the purpose of each of the above internal control activities. The reconciliation of statement of vendors with the accounts payable listing on a monthly basis ensures that there is enough amount of internal control in place to check the overstatement or understatement of expenses. Matching of the invoices with the goods received report before payment to the vendors is a very effective internal control in order to ensure that the payment is not made before the goods are actually received. b. Describe the manner in which each of the above procedures might be tested. To check the operative efficiency of accounts payable, the reconciliation of the associated invoice for purchases received may be done with the accounts payable ledger account along with the yearly reconciliations of accounts payable that are in place. The other way of testing the operational efficiency of the purchases made is by matching the goods receipt report with the invoices received and counter matching with the payments made of a sample voucher. C. Assuming that the operating effectiveness of each of the above procedures is found to be inadequate, describe how auditors might alter their substantive procedure to compensate for the increased level of the risk of material misstatement. The auditor's may alter substantive procedure in order to compensate for the not having found the reconciled vendor payables account with the accounts payable amounts. The substantive procedures may involve confirmation of pending balances in accounts payable by the vendors, unmatched good receipts reports with the purchase invoices and unrecorded liabilities with the purchase ledger. The problem of overpayment against purchases for which the goods are yet to be received is a difficult job. Using the analytical procedures and methods and use of managerial accounting methods such as ratio analysis can help discover the suspected overpayments of accounts payable