GGG Electronics builds shortwave radios. Its manufacturing plant is also a warehouse. When parts are received the receiver compares the type of goods and quantity with a copy of the purchase order available online. If the quantity received differs from the quantity on the purchase order, the receiver adjusts the purchase order amount online. When the goods are checked by the receiver, she sends an email to the accounting department, recording the type of goods, quantity, and date received. The accounting department uses the email to create a recelver's report, and the purchase order is then printed and filed in the accounting department. The online system allows the company to reduce paper, because a hard copy is not needed until the goods are actually received. The company's order entry and tracking system automatically assigns the next number in a series to the purchase order just before printing Inventory is physically moved to the warehousing area, which is located in a locked-up area at the end of the plant. There is a stores department in a separate area for supplies such as gloves, wire, and adhesives, all of which are used in significant quantities on a regular basis. When an assembly-line worker requires supplies, the supervisor hills out a serially pre-numbered requisition card, signs It, and gives it to the worker, who then takes it to the stores department to obtain the needed items. Each supervisor has a stock of requisition cards. When the supplier's invoice is received by the purchasing department, one of the purchasing department staff sends an email to the accounting department, noting the invoice amount supplier name, date of shipment , and type of goods. The accounting department then matches this to the purchase order and receiving report, and prepares a cheque for the controller to sign The controller does not sign the cheque until she also receives an email from the accounting staff indicating that the purchase order, receiving report, and invoice have been matched Which of the following are internal control strengths for GCG's system? Inventory kept in locked area The receiver has access to edit the purchase order online Purchase orders are sequentially pre-numbered Cheques are prepared after purchase order and receiving report are matched Receiving reports are based only on an email Cheque preparation and approval are segregated Controller relies on an email to authorize a cheque Lise Couture is documenting the purchasing and cash payments processes at Hardies Wholesaling. Hardies Wholesaling imports garden and landscaping items, such as pots, furniture, fountains, mirrors, and sculpture, from suppliers in Southeast Asia. All items are non-perishable; are made from materials such as stone, concrete, metal, and wood; and are distributed to retailers throughout the country. Purchases are denominated in US dollars, which the company acquires under forward exchange contracts. The purchasing department initiates a purchase order when inventory levels reach reorder points or sales staff notify the department of large customer orders that need to be specially filled. The purchase order is approved and sent to suppliers selected from an approved supplier list Goods are transported from Southeast Asia by ship and are delivered by truck to Hardies Wholesaling's central warehouse. A receiving report is generated by the receiving department and forwarded to the accounts payable department for matching with the copy of the original purchase order and the supplier's invoice. When the package of documents is completed, the purchase order and invoice are entered into the general ledger. The cash payments department initiates a voucher to request payment of the invoice according to the supplier's payment terms. The payment is approved and the cash payment is made Which of the following duties in the above process should be segregated? Initiating the purchase order and creating the requisition Creating the requisition and receiving the goods Authorizing the purchase and recording the goods received Approving suppliers and paying suppliers Paying suppliers and requisitioning goods Matching the purchase order to the invoice and recording the payable * Your answer is incorrect. Working papers document the audit evidence collected by the auditors during the financial statement audit. The lead schedule for accounts payable will appear at the beginning of the accounts payable section of the audit file. Which of the following would be included on the lead schedule? Pre-adjusted current year's balance and prior year's balance Details of transactions tested for payables Conclusion reached on the overall opinion of the balance in accounts payable Agreement of current year's balance to payables balance on trial balance Difference between pre-adjusted balance and prior year balance Documentation showing the vouching of specific accounts payable balances You are reviewing the audit work for Online Ltd., a large Canadian company. Online uses a service bureau to process all wages. Time sheets are authorized by the appropriate supervisor, batched and sent to the service bureau for processing. Detailed payroll reports, as well as the time sheets are returned to the accountant, who reviews the reports for reasonableness and initials them as evidence of her review. Your audit assistant performed a month-to-month comparison of wages and found no abnormal trends. The following conclusion was noted on the working paper. "I have checked that all payroll reports from the period were reviewed and initialled by the client. This, in conjunction with the results of analytical review, led me to conclude that the payroll expense is fairly stated What additional questions will you ask or what audit procedures will you suggest to ensure payroll is fairly stated? Compare monthly figures to expectations No further work is required Was there a change in the number of staff during the year? Obtain a report from the service entity auditor What was the level of control risk assessed? How much time was spent on the review of payroll expense
