understandine you want GRATED CASE APPLICATION- ACLE MANUFACTURING: PART V of internal control and made an initial assessment of control risk for each transaction- 14-35 (OBJECTIVES 14-3, 14-5) In Part IV of this case study, you obtained an audit objective for acquisition and cash disbursement transactions. The purpose of Pan substantive tests of transactions. In order to do this, you must complete the steps needed to continue the assessment of control risk by determining the appropriate tests of controls prepare a high-quality performance format audit program for tests of controls and substan tive tests of transactions for acquisitions and cash disbursements. Assume in Part IV that you identified the following as the key controls rely on (even though your answers were likely different from these): 1. Segregation of the purchasing, receiving, and cash disbursements functions 2. Use of prenumbered voucher packages, properly accounted for 3. Use of prenumbered checks, properly accounted for 4. Use of prenumbered receiving reports, properly accounted for 5. Internal verification of document package before check preparation 6. Review of supporting documents and signing of checks by an independent, authorized person 7. Cancellation of documents prior to signing of the check 8. Monthly reconciliation of the accounts payable master file with the general ledger CATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION CYCLE 2. Independent reconciliation of the monthly bank statements a. Prepare an audit file listing the nine controls or get them online. b. After each control, identify the transaction-related audit objective(s) that it partially rfully satisfies. or in good form. Immediately below the control, list one audit procedure to test the control. Use the most reliable test of control evidence that you can think of. Write the audit procedure d. Immediately below the test of control, list one substantive test of transactions audit stantive tests of transactions evidence that you can think of. procedure actions." Decide and write one substantive test of transactions audit procedure for to test whether the control failed to be effective. Use the most reliable sub- Create a separate audit schedule labeled Acquisitions Substantive Tests of Trans- each transaction-related audit objective for acquisitions. The audit procedures must be different from the ones in requirement d. The schedule should be designed as follows: Acquisitions Substantive Tests of Transactions Occurrence Write the substantive audit procedure Completeness Write the substantive audit procedure Etc. 1. Using a separate heading labeled "Cash Disbursements Substantive Tests of Trans- actions," decide and write one substantive test of transactions audit procedure for each transaction-related audit objective for cash disbursements. The audit proce- dures must be different from the ones in requirements d. and e. The audit schedule should be designed the same as the one in requirement e. g. Prepare a performance audit program for acquisitions and cash disbursements using all audit procedures in requirements c. through f. See Figure 14-6 (p. 467) for a format. To the extent possible, follow the approach in procedure 13 a. through e. in Figure 14-6 of hav- ing one starting point" procedure followed by other related procedures. Do this for both acquisitions and cash disbursements. Be sure to eliminate any duplicate audit procedures. a
