The following internal controls for the acquisition and payment cycle were selected from a standard internal control questionnaire.
1. Checks are mailed by the owner or manager or a person under her supervision after signing.
2. All supporting documents are cancelled after checks are signed or electronic funds transfers are approved.
3. The authorized signer compares data on supporting documents with checks and electronic funds transfer authorizations.
4. Vendors' invoices are recalculated before payment.
5. Approved purchase orders are required for all acquisitions of goods.
6. Prenumbered receiving reports are prepared as support for acquisitions and numerically accounted for.
7. Dates on receiving reports are compared with vendors' invoices before entry into the acquisitions journal.
8. The accounts payable master file is updated, balanced, and reconciled to the general ledger monthly.
9. Account classifications are reviewed by someone other than the preparer.
10. All checks are signed by the owner or manager.

Required
a. For each control, identify which element of the five categories of control activities is applicable (separation of duties, proper authorization, adequate documents or records, physical control over assets and records, or independent checks on performance).
b. For each control, state which transaction-related audit objective(s) is (are) applicable.
c. For each control, write an audit procedure that could be used to test the control for effectiveness.
d. For each control, identify a likely misstatement, assuming that the control does not exist or is not functioning.
e. For each likely misstatement, identify a substantive audit procedure to determine whether the misstatement exists.