An important primary purpose of the auditor's review of the entity's procurement system should be to determine the effectiveness of the activities to protect against
A) Improper materials handling.
B) Unauthorized persons issuing purchase orders.
C) Mispostings of purchase returns.
D) Excessive shrinkage or spoilage.

Question

Quizplus · Accepted Answer

The primary purpose of the auditor's review of the entity's procurement system is to determine the effectiveness of the activities to protect against unauthorized persons issuing purchase orders. This is because unauthorized persons can issue purchase orders for goods or services that the entity does not need, leading to fraud or misappropriation of funds. Improper materials handling, mispostings of purchase returns, and excessive shrinkage or spoilage are not directly related to the procurement system and are better assessed through other audit procedures.

An Important Primary Purpose of the Auditor's Review of the Entity's