CPA Auditing and Attestation (AUD) : Expenditure Cycle
Study concepts, example questions & explanations for CPA Auditing and Attestation (AUD)
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Example Questions
Example Question #73 : Cpa Auditing And Attestation (Aud)
Proper segregation of duties requires that
The receiving clerk signs the purchase order
Purchase requests are generated by the purchasing agent
The purchasing agent does not prepare purchase orders
Bank reconciliations are not done by those in charge of disbursements
Bank reconciliations are not done by those in charge of disbursements
Proper segregation of duties requires that bank reconciliations are prepared by those employees not associated with disbursing funds.
Example Question #74 : Cpa Auditing And Attestation (Aud)
Physical control over those in charge of disbursement would be:
Bank reconciliations are performed timely
Proper authorization by a supervisor
Employees in charge of cash disbursements are bonded
Proper review of timecards are established
Employees in charge of cash disbursements are bonded
Physical control is not associated with procedures. The use methods to protect assets such as physical barriers and mitigating activities such as insurance. The other examples are procedural internal control methods.
Example Question #2 : Expenditure Cycle
At the end of each month, the senior accountant compares a vendor statement to the accounts payable. This is an example of a
Authorization
Physical control
review procedure
segregation of duty
review procedure
Comparing independent documents with company records is a form of the review procedure. It doesn’t require authorization or physical control.
Example Question #2 : Expenditure Cycle
In auditing A/P, an auditor's procedures most likely would focus primarily on management's assertion of:
Valuation and allocation
Existence
Completeness
Understandability and classification
Completeness
When testing liabilities, an auditor generally is concerned about understatement. Therefore, in auditing A/P, an auditor's procedures most likely would focus primarily on management's assertion of completeness.
Example Question #3 : Expenditure Cycle
The authority to accept incoming goods in receiving should be based on a(n):
Materials requisition
Vendor invoice
Approved purchase order
Bill of lading
Approved purchase order
The authority to accept incoming goods in receiving should be based upon an approved purchase order.
Example Question #12 : Cash Cycle, Revenue Cycle, And Expenditure Cycle
Of the following, which is not a purchase transaction that should be segregated in the expenditure cycle?
Purchase orders
Cash receipts
Purchase requisition
Receipts of goods or services
Cash receipts
Cash receipts would be involved in the revenue cycle so it could not be included in the expenditure cycle.
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