The following misstatements are included in the accounting records of Redgate Manufacturing Ltd.:

1. Telephone expense (G/L code 1122) was unintentionally charged to repairs and maintenance (G/L code 1222).

2. Purchases of raw materials are frequently not recorded until several weeks after the goods are received due to the failure of the receiving personnel to forward the receiving reports to accounting department. When pressure from a suppliers credit department is put on Redgates accounting department, it searches for the receiving report, records the transactions in the purchases journal, and pays the bill.

3. The accounts payable clerk prepares a monthly cheque to Easy Supply Company for the amount of an invoice owed and submits the unsigned cheque to the treasurer for payment along with related supporting documents that have already been approved. When she receives the signed cheque from the treasurer, she records it as a debit to accounts payable and deposits the cheque into a personal bank account with the payee of Easy Supply. A few days later, she records the invoice in the purchases journal, resubmits the documents and a new cheque to the treasurer. After the cheque has been signed by the treasurer, she will send the same to the supplier.

4. The amount of a cheque in the cash disbursements journal is incorrectly recorded as $40,648 instead of $40,468.

5. The accounts payable clerk has intentionally excluded several signed cheques mailed on 27 December (each cheque involving substantial transaction amounts) from the cash disbursements journal, with the intent to prevent cash in the bank from having a negative balance on the general ledger. The clerk has recorded such disbursements on 2 January in the subsequent year.

6. Each month a fictitious receiving report is submitted to the accounting department by an employee in the receiving department. The deceptive method is that he sends Redgate an invoice for the quantity of goods ordered from a small company he owns and operates in the evening. A cheque is prepared, and the amount is paid when the receiving report and the suppliers invoice are matched by the accounts payable clerk.

Required:

(a) For each misstatement, identify the management assertion that has not been met.

(b) For each of the above misstatement, state an internal control that should have prevented the error/fraud from occurring on a continuing basis.

(c) For each of the above misstatement, design a substantive audit procedure that could have been performed by auditors to uncover the error/fraud.