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CIS - Auditing the Expenditure Cycle

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by

April Hope Remandaban

on 10 March 2013

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Transcript of CIS - Auditing the Expenditure Cycle

Auditing the Expenditure Cycle Approaches used in Purchases/
Cash disbursement Audit Objectives Controls and Test of Controls Substantive Tests Batch Purchases System Substantive Test of
Expenditure Cycle Accounts Risk and Audit concerns Payroll - Batch Payroll System with Sequential Files Automated Vs Reengineered System Automated
- Improved inventory
control
- Better Cash Management
- Less time lag
- Better Purchasing Time Mgt.
- Reduction of Paper
documents Input Controls --> Process Controls --> Output Controls * Understanding Data Reengineered Purchases/Cash Disbursement System Reengineered
- Segregation of duties
- Accounting Records and
Access Control - Payroll System with Real-time Elements Input Controls - ensure transactions are valid,
accurate and complete * Data Validation Controls Testing Validation Controls * Batch Controls Testing Batch Controls * Purchases Authorization
Controls Testing Purchases Authorization
Controls * Employee Authorization Testing Employee Authorization Procedures Process Controls - include computerized procedures for
operating files and restricting access to data * File Update Controls Testing File Update Controls * Access Controls Testing Access Controls * Physical Controls Testing Physical Controls Output Controls - ensure that information is not lost, misdirected
or corrupted * Accounts Payable Change Report * Transaction Logs * Transaction Listings * Log of Automatic Transactions * Unique Transaction Identifier * Error Listing Testing Output Controls - concerned primarily for understatement
of liabilities and related expenses Directed towards: - Understatement and Omission
of material items - Operational Audit concerns:

* Process Efficiency
* Fraud
* Losses due to errors INVENTORY FILE PURCHASE ORDER FILE P.O. LINE ITEM FILE RECEIVING REPORT FILE CASH REGISTER FILE DISBURSEMENT VOUCHER FILE SUPPLIER FILE PO
Number Item Number PO Number Receiving Report Number PO Number PO Number Check Number Vendor Number Testing the Accuracy and Completeness Assertions * Performing Analytical Review - Review disbursement vouchers for
unusual trends and exceptions
( Excessive purchases from a single supplier)
- Using ACL's Stratify and Classify feature * Reviewing for Accurate Invoice Prices - Comparing invoice prices with the
purchase orders on a sample basis - Using ACL's Expression Builder feature Testing the Completeness, Existence and Rights and Obligations Assertions * Searching for Unrecorded Liabilities - Disbursement Voucher &
Receiving Report Files * Searching for Unauthorized
Disbursement Voucher * Review for multiple checks to vendors Usual causes for duplicate payments: - Malfunctioning Computer programs
- Data entry errors
- Failure of Authorization control - Employing ACL's Duplicate Feature Auditing Payroll and Related Accounts - Consist primarily of analytical
procedures and reviews of
disbursements made. - Using ACL's Stratify Feature END! Management Assertions Existence or Occurrence Completeness Accuracy Rights and Obligations Valuation and Allocation Presentation and Disclosure Expenditure Cycle Audit Objectives -Verify that A/P balances represents amount owed by the company at the balance sheet date
-Determine that it represents purchases and payroll transactions during the period covered by the financial statements - Determine that A/P represents all amount owed by the company at the balance sheet date
- Verify and ensure that it reflects all the purchases and payroll transactions during the period covered by the financial statements - Established that accurate computations were done and were based on correct prices and quantities.
- Ensure that A/P subsidiary ledger is mathematically correct
-Verify that payroll amounts are based on correct pay rates and hours worked and are correctly computed. - Established that the A/P and accrued payroll recorded at balance sheet date are legal obligations of the entity. - Verify that A/P are stated at correct amounts owed. - Ensure that A/P, accrued payroll and expenses reported for the period are properly described and classified in the financial statements. As of 06/30/10 14:53:14
Command: STRATIFY ON Ven_Num SUBTOTAL Full_Amount TO SCREEN
Table: DisbVoucher

10001 12 4.07% .78% 8,441.85
10025 3 1.02% 0% 40.23
10101 1 .34% .01% 120.33
10134 1 .34% -.01% -54.57
10366 48 16.27% 40.79% 441,293.98
10559 4 1.36% .61% 6,548.21
10656 2 .68% .03% 357.54
10787 7 2.37% .27% 2,950.73
10879 13 4.41% .65% 7,008.51
10951 6 2.03% .01% 108.59
11000 1 .34% .01% 72.72
11182 6 2.03% .18% 1,964.99
11213 1 .34% 0% 11.53
11247 7 2.37% 7.27% 78,608.55
11435 4 1.36% .06% 651.10
11475 5 1.69% 1.49% 16,091.94
11645 12 4.07% .19% 2,068.54
11663 18 6.1% 11.19% 121,010.48
11837 7 2.37% .04% 458.52
Ven_Num Count Percent of Count Percent of Field Full_Amount As of 06/30/10 14:53:14
Command: STRATIFY ON Full_Amount MINIMUM -7000 MAXIMUM 120000 INTERVALS 10 TO SCREEN
Table: DisbVoucher
Minimum encountered was -584.22
Maximum encountered was 110,035.04


-7,000.00 –5,699.99 268 90.85% 15.25% 164,692.05
5,700.00 – 13,399.99 14 4.75% 11.68% 126,341.70
13,400.00 – 31,099.00 0 0% 0% 0.00
31,100.00 - 43,799.00 3 1.02% 10.35% 111,997.56
43,800.00 – 56,499.00 3 1.02% 12.71% 137,496.48
56,500.00 – 69,199.99 3 1.02% 17.31% 187,256.91
69,200.00 – 81,899.00 2 .68% 14.38% 155,598.63
81,900.00 – 94,599.99 1 .34% 8.14% 88,051.68
94,600.00 – 107,299.99 0 0% 0% 0.00
107,300.00 – 120,000 1 .34% 10.17% 110,035.04
Totals 295 100% 100% 1,081,740.05
Full_Amount Count Percent of Count Percent of Field Full_Amount As of 06/09/2010 13:28:45

Command: DUPLICATES ON PO_Num OTHER Voucher_Num TO SCREEN PRESORT
Table: Voucher_Pay

0 sequence errors detected
1 gap or duplicate detected

Duplicates:

PO_Num Voucher_Num

12977 10392
12977 10393
Full transcript