AUDITING
AUDITING
AUDITING
MATCHING:
63. Indicate by letter the internal control that best
describes each of the listed control procedures.
a. Accuracy control--prevention
b. Accuracy control--detection
c. Safeguard control--prevention
d. Safeguard control--detection
____1. All incoming checks are restrictively
endorsed immediately upon receipt
____2. Accounting manuals are used to determine
debit and credit accounts for nonrecurring
transactions
____3. Bank accounts are reconciled monthly by
persons not having access to either financial assets
or accounting records
PROBLEM/ESSAY:
64. An important component of internal control
monitoring is the periodic examination of substance
and comparison with its recorded accountability.
Give three examples of this form of monitoring and,
for each example, identify the account and the
underlying substance.
SOLUTION:
Access controls:
1. Secure areas for merchandise, small tools,
supplies, securities, etc.
2. Cash registers with locked-in tapes
3. Limited access to unused documents
4. Daily intact deposits of cash receipts
5. System of passwords to limit access to computer
data bases
6. Dual access to negotiable securities
Accountability controls:
SOLUTION:
1. Compare inventories (substance) with perpetual
inventory records (account)
2. Reconcile bank accounts
Substance: bank statements