auditing the expenditure cycle
DESCRIPTION
Chapter 10 - Auditing the Expenditure Cycle ( Information technology Auditing and Assurance By James hall )TRANSCRIPT
![Page 1: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/1.jpg)
AUDITING THE EXPENDITURE CYCLE
![Page 2: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/2.jpg)
PURCHASES AND CASH DISBURSEMENT PROCEDURES USING . BATCH PROCESSING TECHNOLOGY Data Processing
Department: Step 1 Processing Departmento 5 part purchase ordero 3 alternatives for authorizing and ordering inventories
DPD: Step 2 Receiving Department
![Page 3: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/3.jpg)
DPD: Step 3 Accounts Payable
DPD: Step 4 Cash Disbursemento Data Processing Departmento Cash Disbursements Departmento Accounts Payable
![Page 4: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/4.jpg)
REENGINEERING THE PURCHASES/CASH DISBURSEMENT . SYSTEM
Data Processing Receiving Department Accounts Payable
![Page 5: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/5.jpg)
The Automated System Improved Inventory Control
Better Cash Management Less Time Lag Better Purchasing Time Management
Reduction of Paper Documents
The Reengineered System Segregation of Duties Accounting Records and Access Controls
![Page 6: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/6.jpg)
OVERVIEW OF PAYROLL PROCEDURES
General expenditure procedures that apply to all vendors will not apply to employees
Writing checks to employees requires special controls
General expenditure procedures are designed to accommodate a relatively smooth flow of transactions
![Page 7: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/7.jpg)
Reengineering the Payroll System Human Resource Management (HRM) System
Key Features: Personnel Cost Accounting Timekeeping Data Processing
![Page 8: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/8.jpg)
EXPENDITURE CYCLE AUDIT OBJECTIVES, CONTROLS, AND . . TESTS OF CONTROLS Input Controls
Data Validation Controls Testing Validation Controls Batch Controls Testing Batch Controls Purchases Authorization Controls
Testing Purchases Authorization Controls
Employee Authorization Testing Employee Authorization Procedures
![Page 9: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/9.jpg)
Process Controls File Update Controlso Sequence Check Controlo Liability Validation Controlo Valid Vendor Fileo Testing File Update Controls
Access Controls Testing Access Controls Physical Controlso Purchases System Control• Segregation of inventory control from the warehouse
![Page 10: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/10.jpg)
• Segregation of the general ledger and AP from Cash Disbursements• Supervision of Receiving Department• Reconciliation of Supporting Documents
o Payroll System Controls• Verification of Time Cards• Supervision• Paymaster• Payroll Imprest Account
Testing Physical Controls
![Page 11: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/11.jpg)
Output Controls Accounts Payable Change Report
Transaction Logs Transaction Listing Log of Automatic Transactions
Unique Transaction Identifiers
Error Listing Testing Output Controls
![Page 12: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/12.jpg)
SUBSTANTIVE TESTS OF EXPENDITURE CYCLE ACCOUNTS
Inventory File Purchase Order File Purchase Order Line Item File Receiving Report File Disbursement Voucher File and Check Register File
![Page 13: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/13.jpg)
Testing the Accuracy and Completeness Assertions
Review Disbursement Vouchers for Unusual Trends and Exceptions Stratify Classify
Reviewing for Accurate Invoice Prices Join
![Page 14: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/14.jpg)
![Page 15: Auditing the expenditure cycle](https://reader033.vdocuments.us/reader033/viewer/2022061211/54935673b47959210f8b4899/html5/thumbnails/15.jpg)
Testing the Completeness, Existence, and Right and Obligations Assertions Searching for Unrecorded Liabilities
Searching for Unauthorized Disbursement Vouchers
Review for Multiple Checks to Vendors
Auditing Payroll and Related Accounts