Cocoa Products Manufacturing Inc. (CPMI) is undergoing its annual audit for the year ended December 31, 2019. When the company clerk in the stores department dispenses goods to a shop supervisor, she also enters the transaction online into the companys material handling software. The accounting department also has access to this system. In February 2019, to ensure that all purchases are authorized, the company implemented an internal control that all purchase orders (POs) must be approved by the purchasing manager. During the interim audit procedures, the auditor observed that whenever a PO was missing the purchasing managers initials, the accounting clerk would physically take the PO to the purchasing manager and get her to initial it before accounting would prepare the cheque for the controllers signature. In addition to observation, the auditor selected a sufficient number of various authorized POs from all recorded POs and examined them for the purchasing managers initials. No missing initials were found. The auditor also recalculated the amounts on the supplier invoices after verifying that the correct prices were used. Again no errors were found.

Required:

1. Can the auditor conclude that the internal controls for accuracy (of the POs) are effective, based on the evidence from the work conducted? Briefly explain.

2. Provide three relevant comments regarding the authorization control at CPMI that an auditor should document in his or her working papers for the year ended December 31, 2019.