Methodology for Designing Tests of Controls and Substantive Tests of Transactions

Mary Williams

Chapter 18

18-21

1Trace transactions recorded in the acquisitions journal to supporting documentation, comparing the vendor's name, total dollar amount and the authorization for acquisition. BOTH

Purpose of procedure is accuracy; Recorded acquisition transactions are accurate

2Examine documents in support of acquisition transactions to make sure that each transaction has an approved vendor's invoice, receiving report, and purchase order included CONTROL

Purpose of procedure is occurrence; Recorded acquisitions are for goods and services received, consistent with the best interests of the client

3Foot the cash disbursements journal, trace postings of the total to the general ledger and trace postings of individual cash disbursements to the accounts payable master file TRANSACTION

Purpose of procedure is posting and summarization-Cash disbursement transactions are correctly included in the AP master file and are correctly summarized

4Account for a numerical sequence of checks in the cash disbursements journal and examine all voided or spoiled checks for proper cancellation. CONTROL

Purpose of procedure is COMPLETENESS; existing cash disbursement transactions are recorded.

5Prepare a proof of cash disbursements for an interim month. TRANSACTIONS Purpose of procedure is accuracy;