AC 410 All Assignments AC 410 All Assignments | Page 14

1. Are monthly statements from vendors reconciled with the accounts
payable listing?
Monthly statements from vendors should be reconciled to the payables
ledger.
2. Are vendors’ invoices matched with receiving reports before they are
approved for payment?
The two procedures are test controls that provides auditors the
evidence to access control risk of financial statements.
Required:
a. Describe the purpose of each of the above internal control activities.
b. Describe the manner in which each of the above procedures might
be tested.
c. Assuming that the operating effectiveness of each of the above
procedures is found to be inadequate, describe how the auditors might
alter their substantive procedures to compensate for the increased
level of the risk of material misstatement.
Questions Requiring Analysis 15-30
You are retained by Columbia Corporation to audit its financial
statements for the fiscal year ended June 30. Your consideration of
internal control indicates a fairly satisfactory condition, although there