Client: 6734 to last number 33722 Define the

  Client:  Pinnacle Manufacturing                 Audit Area:  Tests of Controls and Substantive Test of Transactions–Acquisitions.

                            Define the Objective(s):  Examine vendor invoices, purchase orders to verify is working as documented in the audit program.                       Define the population precisely (including stratification, if any):  Vouchers from first number 6734 to last number 33722                       Define the sampling unit, organization of population items, and random selection procedures:       Organization of population items, and random selection procedures in excel         Description of Attributes Planned Audit Actual Results EPER TER AROR Initial sample Size Sample Size Number of Exceptions SER Calculated Sampling Error          (TER-SER) 1. Evidence of internal verification: dates, unit costs, prices, extenstions and footings, posting and summarization, etc.

1% 6% Low 75 75 2 2.67% 3.33% 2. Compare prices on vendor invoices to the price limits established by management 0% 5% Low 50 50 0 0.00% 5%   3.

Recompute information on the vendor invoices 1% 5% Low 75 75 0 0.00% 5% 4. Examine the vendor invoices for proper account classification 2% 5% Low 100 100 0 0.00% 5% 5. Verify the dates of the acquistions recorded with the dates on the receiving reports 1% 5% Low 75 75 2 2.67% 2.

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33% 6. Examine the purchase orders for evidence of internal verification 0% 6% Low 50 50 0 0% 6% Results:  1. Effect on Audit Plan: Controls tested through attributes 1-6 can be viewed as operating effectively given the size of the allowance for sampling error (TER-SER). There is additional emphasis needed on the following: confirmations, cutoff testing, and price testings for the financial statement audit due to the results found in testing of attributes 1 and 5.  2.

Effect on Report on Internal Control: Controls tested through attributes 1-6 can be viewed as oeprating effectively given the size of the allowance for sampling error. 3. Recommendations to Management: All of the exceptions should be reviewed individually with management, specific recommendations are needed to correct the internal  verification of vendor invoices and to improve their cutoff procedures.