Question
Each of the following tests of controls could be performed during the audit of the controls in the production cycle. Required: For each procedure, identify
Each of the following tests of controls could be performed during the audit of the controls in the production cycle.
Required:
For each procedure, identify (a) the internal control objective being tested and (b) the assertion(s) being addressed.
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Balance and reconcile detailed production cost sheets to the work-in-process inventory control account.
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Objective:
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Addressed:
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Scan closed production cost sheets for missing numbers in the sequence.
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Vouch a sample of open and closed production cost sheet entries to (a) labor reports and (b) issue forms and materials used reports.
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Locate the material issue forms and determine whether they are (a) prenumbered, (b) kept in a secure location, and (c) available to unauthorized persons.
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Select several summary journal entries in the work-in-process inventory and (a) vouch them to weekly labor and material reports and to production cost sheets and (b) trace them to the control account.
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Select a sample of the material issue forms in the production department file. Examine them for
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Issue date and materials used report date.
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Production order number.
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Floor supervisor's signature or initials.
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Name and number of material.
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Raw materials stores clerk's signature or initials.
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Material requisition in raw materials stores file, noting the date of requisition.
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Determine by inquiry and inspection whether cost clerks review dates on reports of units completed for accounting in the proper period.
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