Question: 8.37: Prevent controls
- A pre-numbered cheque requisition is prepared for all payments.
- The details on the supplier’s invoice are matched to the appropriate receiving report.
- The details on the supplier’s invoice and receiving report are matched to an authorised purchase order.
- The cheque requisition is stapled to the authorised purchase order, receiving report and supplier’s invoice and forwarded to the appropriate senior staff member for review and authorisation.
- The authorised cheque requisition, together with the supporting documents, is passed to accounts payable for payment.
- Identify the key assertion at risk for payables in relation to payments made prior to receipt of goods.
- For the control procedures (1) to (5) for payables:
- Identify the key preventative internal control that directly addresses the risk of payments being made by Everfree Forest Hospital to its suppliers before the goods are received.
- Outline how your choice of the internal control in (i) will prevent payment to suppliers prior to receipt of goods.
- Design and describe in detail an appropriate test of control that you would use to satisfy yourself about the effectiveness of this internal control.
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