The following questions related to cash disbursements are included in the internal control questionnaire for LUNA Company: 1. Are all supporting documents effectively cancelled when checks are signed? 2. Are cash discounts to which the entity is entitled taken? 3. Does someone independent of accounts payable reconcile monthly vendor’s statements to vouchers included as liabilities at the end of the period? Required: For each of the above items a. Identify the financial statement assertion to which the control relates. b. Identify a potential misstatement that could arise from the absence of the control. c. Indicate an audit procedure the auditor might perform to test the con
The following questions related to cash disbursements are included in the internal control questionnaire for LUNA Company: 1. Are all supporting documents effectively cancelled when checks are signed? 2. Are cash discounts to which the entity is entitled taken? 3. Does someone independent of accounts payable reconcile monthly vendor’s statements to vouchers included as liabilities at the end of the period? Required: For each of the above items a. Identify the financial statement assertion to which the control relates. b. Identify a potential misstatement that could arise from the absence of the control. c. Indicate an audit procedure the auditor might perform to test the con
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following questions related to cash disbursements are included in the internal
control questionnaire for LUNA Company:
1. Are all supporting documents effectively cancelled when checks are signed?
2. Are cash discounts to which the entity is entitled taken?
3. Does someone independent of accounts payable reconcile monthly vendor’s
statements to vouchers included as liabilities at the end of the period?
Required: For each of the above items
a. Identify the financial statement assertion to which the control relates.
b. Identify a potential misstatement that could arise from the absence of the
control.
c. Indicate an
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