INTEGRATED CASE APPLICATIONPINNACLE MANUFACTURING: PART V

I$4-35($OBJECTIVES $14-3,14-5)$ In Part IV of this case study, you obtained an understanding of internal control and made an initial assessment of control risk for each transaction$-$related audit objective for acquisition and cash disbursement transactions. The purpose of Part V isto continue the assessment of control risk by determining the appropriate tests of controls and substantive tests of transactions. In order to do this, you must complete the steps needed to prepare a high$-$quality performance format audit program for tests of controls and substantive tests of transactions for acquisitions and cash disbursements.

Assume in Part IV that you identified the following as the key controls you want to rely on $($even though your answers were likely different from these$)$:

Segregation of the purchasing, receiving, and cash disbursements functions

Use of prenumbered voucher packages, properly accounted for

Use of prenumbered checks, properly accounted for

Use of prenumbered receiving reports, properly accounted for

Internal verification of document package before check preparation

Review of supporting documents and signing of checks by an independent, authorized person

Cancellation of documents prior to signing of the check

Monthly reconciliation of the accounts payable master file with the general ledger

Part $3/$ APPLICATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION CYCLE