An entity's internal control structure requires for every check request that there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all
A)purchase orders.
B)canceled checks.
C)receiving reports.
D)approved vouchers.

Question

Quizplus · Accepted Answer

Canceled checks are the best source for testing because they represent the actual disbursement of funds, allowing the auditor to verify whether each disbursement was authorized and supported by the required documentation (approved voucher, purchase order, and receiving report).

An Entity's Internal Control Structure Requires for Every Check Request