Auditing expenditure CyCle

1. Auditing the Expenditure cycle Prepared by: Imran Hasan Siddiquee. EMBA program(201-12-713) Prepared for: Prof. DR. Abul Hossain. Department of Business Administration. Daffodil International University.

2. Overview

3. Purchase Transactions – Activity Cycle/Activities involved. • First, purchase requisition raised by the user. • Purchase order raised by procurement after justification of the purchase. • PO can be issued to only preapproved vendor as per vendor master list. • After approval of PO according to DOA, it’s provided to vendor for acquisition. • Goods Receiving point- inspect goods condition & raise GR in PO if satisfied and sign off Challan. • Vendor sent Invoice for payment.

4. Purchase Transactions – Common activities involved/Checks. • After receiving invoice payment teams do a three-way matching of the invoice.(PO,GR.INV) • Once the matching is complete, vendor payment is ready to disburse as per credit agreement. • Money gets transferred to vendors designate/preapproved bank account as per vendor master data through EFT • Vendor aging/Payables aging is done to identify long due payment pending's.

5. Systems Flowchart – Purchase Transaction

6. Audit Objectives

7. Consideration of Internal Control Components • Control Environment • Risk Assessment • Information and Communication • Monitoring

8. Designing Substantive Tests • Tests of Details of Transactions • Vouch Recorded Payables to Supporting Documentation • Perform Cutoff Tests • Purchases cutoff tests • Cash disbursement cutoff tests • Purchase return cutoff tests • Perform Search for Unrecorded Payables • Subsequent payments

9. Designing Substantive Tests • Tests of Details of Balances • Accounts Payable Confirmations • Reconcile Unconfirmed Payables to Vendor Statements • Tests of Details of Disclosures