Name: Ngo Hoai Phuong

Student Id: 31201025062

8.24 MEDIUM While working on the audit of Cosmopolitan Ltd, you are involved in a
review of control activities in the cash disbursement area. As part of your review, you have
noted the following procedures:
1. All payments prepared by the clerk include a pre-numbered bank transfer requisition.
2. The bank transfer requisition requires the clerk to confirm that they have performed the
following procedures for each payment:
● checked the additions and prices on the invoice
● confirmed the details on the invoice have been matched to a delivery note by the
warehousing department
● verified a valid purchase order exists for the goods.3. The clerk forwards the bank transfer
requisition together with any supporting documentation (invoice and any other relevant
correspondence) to the CFO for approval

REQUIRED
For each of the three controls identified above:
(a) Describe the purpose of the control-what is the control designed to prevent or detect?
(b) Identify the account(s) and assertion(s) that this control will have an effect on in the
financial report.
(c) Give one example of a procedure that could be used to test the control.

1. All payments prepared by the clerk include a pre-numbered bank transfer requisition:(a) to
prevent and detect non-recording of payments(b) accounts payable (and related
expense/asset) completeness-(ensure all payments are recorded)(c) sequence check to
ensure that all pre-numbered bank transfer requisitions are accounted for.
2. The bank transfer requisition requires the clerk to confirm that they have performed the
following procedures for each payment:
● checked the additions and prices on the invoice
● confirmed the details on the invoice have been matched to a delivery note by the
warehousing department
● verified a valid purchase order exists for the goods
(a) To prevent unauthorized access to company funds (fraud/theft) by ensuring payments are
only made for goods received and ordered by the company and are recorded for the proper
amount.
(b) Expense/asset-occurrence and accuracy in relation to the expense (is it a real
transaction and is the amount correct?) or existence and accuracy, valuation and allocation
(do the assets purchased exist and have they been recorded at the proper amount?)
(c) Review a sample of bank transfer réquisitions and ensure all procedures have been
completed. Re-perform checks for a sample of requisitions.
3. The clerk forwards the bank transfer requisition together with any supporting
documentation (invoice and any other relevant correspondence) to the CFO for approval:
(a) to prevent unauthorized access to company funds (fraud/theft) by ensuring all payments
are approved by a suitable company official to prevent error in accounting entries and
information posted as approver checks the details also.
(b) expense/asset-occurrence and accuracy in relation to the expense (is it a real transaction
and is the amount correct?), or existence and accuracy, valuation and allocation (do the assets
purchased exist and have they been recorded at the proper amount?)
(c) review a sample of bank transfer requisitions and ensure all contain evidence of
authorisation.