|
|
 |
|
Sarbanes Oxley Act -
Auditing Standards |
|
Public
Company Accounting Oversight
Board
Bylaws
and Rules – Standards – AS2
Auditing
Standard No. 2: An Audit of Internal Control
Over Financial Reporting Performed in
Conjunction With an Audit of Financial
Statements
Example
B-3 – Daily Manual
Preventive Control
The
auditor determined that cash and accounts
payable were significant accounts to
the
audit
of the company's internal control over financial
reporting. Through discussions
with
company personnel, the auditor learned that
company personnel make a cash
disbursement
only after they have matched the vendor invoice
to the receiver and
purchase
order.
To
determine whether misstatements in cash
(existence) and accounts
payable
(existence, valuation, and completeness) would
be prevented on a timely basis,
the
auditor tested the control over making a cash
disbursement only after matching
the
invoice
with the receiver and purchase.
Nature, Timing, and
Extent of Procedures.
On a haphazard basis,
the auditor selected
25
disbursements from the cash disbursement
registers from January through
September.
In this example, the auditor deemed a test of 25
cash disbursement
transactions
an appropriate sample size because the auditor
was testing a manual
control
performed as part of the routine processing of
cash disbursement transactions
through
the system. Furthermore, the auditor expected no
errors based on the results
of
company-level tests performed earlier. [If,
however, the auditor had encountered
a
control
exception, the auditor would have attempted to
identify the root cause of the
exception
and tested an additional number of items. If
another control exception had
been
noted, the auditor would have decided that this
control was not effective. As a
result,
the auditor would have decided to increase the
extent of substantive
procedures
to
be performed in connection with the financial
statement audit of the cash and
accounts
payable accounts.]
a.
After obtaining the related voucher package, the
auditor examined the invoice to
see
if it included the signature or initials of the
accounts payable clerk,
evidencing
the clerk's performance of the matching control.
However, a
signature
on a voucher package to indicate signor approval
does not necessarily
mean
that the person carefully reviewed it before
signing. The voucher package
may
have been signed based on only a cursory review,
or without any review.
b.
The auditor decided that the quality of the
evidence regarding the
effective
operation
of the control evidenced by a signature or
initials was not sufficiently
persuasive
to ensure that the control operated effectively
during the test period.
In
order to obtain additional evidence, the auditor
reperformed the matching
control
corresponding to the signature, which included
examining the invoice to
determine
that (a) its items matched to the receiver and
purchase order and (b) it
was
mathematically accurate.
Because
the auditor performed the tests of controls at
an interim date, the auditor
updated
the testing through the end of the year (initial
tests are through September to
December)
by asking the accounts payable clerk whether the
control was still in place
and
operating effectively. The auditor confirmed
that understanding by performing
a
walkthrough
of one transaction in December.
Based
on the auditor's procedures, the auditor
concluded that the control over making
a
cash
disbursement only after matching the invoice
with the receiver and purchase
was
operating
effectively as of
year-end.
|
|
.
| | |
