Page 110 - Audit Day 3 - Class Slides

THE ACQUISITIONS AND PAYMENTS CYCLE

RISKS WITH THE RECORDING OF PURCHASES

• Recording of incorrect amounts arising from

incorrect purchase invoices;

oQuantity, quality and type not as ordered or received

oPrices of goods not as quoted

oCalculation errors e.g. casts, extensions, VAT

• Raising of fictitious purchases/ creditors by the

introduction of invoices which are for goods

never ordered or received by the company.

• Delays, misallocation and posting errors when

entering details into accounting records resulting

in reconciliation problems and failure to make

use of favorable settlement terms.

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