An auditor learns that his client has paid a vendor twice for the same shipment, once based upon the original invoice and once based upon the monthly statement. A control procedure that should have prevented this duplicate payment is:
A) prenumbering of payment vouchers.
B) use of a limit or reasonableness test.
C) prenumbering of receiving reports.
D) supporting documentation is examined before signing of cheques by an authorized person.

Question

Quizplus · Accepted Answer

The best control procedure to prevent duplicate payments is to examine supporting documentation before signing cheques. This ensures that the payment is based on accurate information and eliminates the possibility of paying an invoice twice. Prenumbering of payment vouchers and receiving reports only ensures that all documents are accounted for, but does not prevent duplicate payments. A limit or reasonableness test can help prevent overpayment but would not necessarily prevent duplicate payments.

An Auditor Learns That His Client Has Paid a Vendor