The flashcards below were created by user
on FreezingBlue Flashcards.
In testing controls over cash disbursements, an auditor most likely would determine that the person who signs checks also
Is responsible for mailing the checks.
The person responsible for signing the checks also should be responsible for assuring that the checks are mailed. This precaution assures limited access to the checks once they are signed.
In a well-designed internal control system, employees in the same department most likely would approve purchase orders, and also
Negotiate terms with vendors.
To prevent or detect fraud or error in the performance of assigned responsibilities, duties are often segregated. Approving purchase orders and negotiating terms with vendors are part of the authorization process performed by the purchasing department.
A control that a company can use to detect forged EDI messages is to
Acknowledge all messages initiated externally with confirming messages.
If an entity acknowledges messages initiated externally, the alleged sender will have the opportunity to recognize that it had not sent the message and will then be able to notify the entity of the potential forgery. Then, corrective action can be taken.
The sampling unit in a test of controls pertaining to the occurrence of payroll transactions ordinarily is a(n)
Payroll register entry.
Determining whether payroll transactions occurred is an internal control objective of the human resources and payroll cycle. The payroll register records each payroll transaction for each employee. Thus, an entry in the payroll register is reconciled to time cards to test whether the recorded transaction actually occurred.
Which of the following controls could best prevent direct labor from being charged to manufacturing overhead?
A.Reconciliation of work-in-process inventory with cost records.
B.Comparison of daily journal entries with factory labor summary.
C.Reconciliation of unfinished job summary and production cost records.
D.Comparison of periodic cost budgets and time cards.
B. Comparison of daily journal entries with factory labor summary.
Daily journal entries are made to record labor, materials, and overhead. Direct labor is posted from the daily factory labor summary. If the latter has been properly recorded, tracing the amounts to the journal entries will determine whether manufacturing overhead was incorrectly charged with direct rather than indirect labor.