10-45 PINNACLE MANUFACTURING . Part lll Control Matrix-Cash Disbursements Transa

Question

10-45 PINNACLE MANUFACTURING . Part lll Control Matrix-Cash Disbursements Transaction Related Recorded cash Existing cash Recorded Recorded cash Cash disbursement disbursement Cash Audit Objectives disbursements disbursement cash disbursement are for goods transactions disbursement transactions are transactions transactions are and services actually received (complete are stated at the master file, and classified (occurrence) ess the correct are recorded transactions properly included in are properly recorded on the correct dates the correct are proper (accuracy) and summarization) (classification). (timing)- Internal Controls 2. 3. 5. 6. 8. 9. 2. Assessed control risk Note: This is a standard form to be used by students. There aren't necessarily 9 controls and 3 deficiencies in the case

Explanation / Answer

Cash
disbursement
transactions
are properly
classified
(classification).

Cash
disbursement
transactions are
recorded on the
correct dates
(timing).

_________

Recorded
acquisition
transactions are
properly included
in the master files,
and are properly
summarized
(posting and
summarization).

Acquisition
transactions are
properly
classified
(classification).

Acquisition
transactions
are recorded
on the
correct dates
(timing).

Pinnacle Manufacturing – Part 3 Control Risk Matrix – Cash Disbursements Transaction Related Audit Objective, Internal Controls Recorded cash disbursements are for goods and services actually received (occurrence). Existing cash disbursement transactions are recorded (completeness) Recorded cash disbursement transactions are stated at the correct amounts (accuracy). Recorded cash disbursement transactions are properly included in the master file, and are properly summarized (posting and summarization).

Cash
disbursement
transactions
are properly
classified
(classification).

Cash
disbursement
transactions are
recorded on the
correct dates
(timing).

Segregation of functions C Review of support, signing of checks by authorized person C Prenumbered checks; accounted for C Use of chart of accounts C Procedures for prompt recording C Monthly reconciliation of A/P master file with G/L C Deficiencies Lack of an independent bank reconciliation (Done by Treasurer) D D Lack of internal verification of documentation package by cash disbursements clerk D D D Lack of internal verification of key entry into cash disbursements file D D D
Assessed control risk
Medium
Medium
High
Low
Low
Low

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