Auditing-Purchasing and Inventory Cycles Essay Example | Topics and Well Written Essays - 500 words

Auditing-Purchasing and Inventory Cycles - Essay Example Populations of documents are used to sample whether activities are authorized, production was completed and placed in inventory or written off as scrap and that finished goods inventory was produced and properly costed. Examples include; stock records, purchases ledger, goods returned note, goods produced note and check for the signature authorization by the responsible authority. The auditor examines the travel and expense accounts to verify the supporting documents to determine whether the transactions are correctly stated. The higher authority might abuse the travel and entertainment expenses for personal benefits. The auditor determines whether the expenses were incurred for business purposes and not for personal benefits (Ricchuite, 2005). The poor controls regarding executive reimbursement hinders the purpose of evaluating and reporting on internal control. The evaluation of the internal control will lead to the disclosure of the weak areas in the reimbursement of the top managers. The auditor can use various auditing procedures for auditing various expense accounts including miscellaneous expenses. This assists the auditor in verifying whether the expenses recorded were incurred and that they were accurately recorded in the correct accounting period. The procedures include obtaining all the relevant receipts and documents and checking for authorization and accuracy in recording as explained by Bragg (2009). The purchasing manager can use their position to defraud the company in multiple ways and the company should install a strong ICS to detect such activities (Kumar and Sharma, 2009). The purchasing managers can collude with third parties (buyers and sellers) to defraud the company. The managers can include unusual purchases that are not included in the operating budget. They can vary the purchase order proficiency