The following misstatements are included in the accounting records of Westgate Manufacturing Company.1. Each month, a fraudulent receiving report is submitted to accounting by anemployee in the receiving department. A few days later, he sends Westgate an invoicefor the quantity of goods ordered from a small company he owns and operates inthe evening. A check is prepared, and the amount is paid when the receiving reportand the vendor’s invoice are matched by the accounts payable clerk.2. Telephone expense (account 2112) was unintentionally charged to repairs andmaintenance (account 2121).3. The accounts payable clerk prepares a monthly check to Story Supply Company forthe amount of an invoice owed and submits the unsigned check to the treasurer forpayment along with related supporting documents that have already been approved.When she receives the signed check from the treasurer, she records it as a debit toaccounts payable and deposits the check in a personal bank account for a companynamed Story Company. A few days later, she records the invoice in the acquisitionsjournal again, resubmits the documents and a new check to the treasurer, and sendsthe check to the vendor after it has been signed.4. The amount of a check in the cash disbursements journal is recorded as $4,612.87instead of $6,412.87.5. The accounts payable clerk intentionally excluded from the cash disbursementsjournal seven large checks written and mailed on December 26 to prevent cash inthe bank from having a negative balance on the general ledger. They were recordedon January 2 of the subsequent year.6. Acquisitions of raw materials are often not recorded until several weeks after thegoods are received because receiving personnel fail to forward receiving reports toaccounting. When pressure from a vendor’s credit department is put on Westgate’saccounting department, it searches for the receiving report, records the transactionsin the acquisitions journal, and pays the bill.a. For each misstatement, identify the transaction-related audit objective that was not met.b. For each misstatement, state a control that should have prevented it from occurringon a continuing basis.c. For each misstatement, state a substantive audit procedure that could uncover it.
The following misstatements are included in the accounting records of Westgate Manufacturing Company.
1. Each month, a fraudulent receiving report is submitted to accounting by an
employee in the receiving department. A few days later, he sends Westgate an invoice
for the quantity of goods ordered from a small company he owns and operates in
the evening. A check is prepared, and the amount is paid when the receiving report
and the vendor’s invoice are matched by the accounts payable clerk.
2. Telephone expense (account 2112) was unintentionally charged to repairs and
maintenance (account 2121).
3. The accounts payable clerk prepares a monthly check to Story Supply Company for
the amount of an invoice owed and submits the unsigned check to the treasurer for
payment along with related supporting documents that have already been approved.
When she receives the signed check from the treasurer, she records it as a debit to
accounts payable and deposits the check in a personal bank account for a company
named Story Company. A few days later, she records the invoice in the acquisitions
journal again, resubmits the documents and a new check to the treasurer, and sends
the check to the vendor after it has been signed.
4. The amount of a check in the cash disbursements journal is recorded as $4,612.87
instead of $6,412.87.
5. The accounts payable clerk intentionally excluded from the cash disbursements
journal seven large checks written and mailed on December 26 to prevent cash in
the bank from having a negative balance on the general ledger. They were recorded
on January 2 of the subsequent year.
6. Acquisitions of raw materials are often not recorded until several weeks after the
goods are received because receiving personnel fail to forward receiving reports to
accounting. When pressure from a vendor’s credit department is put on Westgate’s
accounting department, it searches for the receiving report, records the transactions
in the acquisitions journal, and pays the bill.
a. For each misstatement, identify the transaction-related audit objective that was not met.
b. For each misstatement, state a control that should have prevented it from occurring
on a continuing basis.
c. For each misstatement, state a substantive
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
