During an audit of Dundee Corporation's financial statements, you become aware of the following control procedures over purchasing and cash disbursement activities:

1. Purchases are made only from companies that warrant products for workmanship and related damages.

2. Competitive bids are required for all purchases in excess of $12,000.

3. A written memorandum is required for each purchase discount not taken.

4. Receiving reports are prenumbered sequentially and access is controlled.

5. Voucher packages are canceled immediately after payment.

6. A procedures manual is maintained for all job functions related to processing purchases and cash disbursements transactions.

7. Postings are verified by check digits.

Required:

For each control procedure, indicate:

(a) a potential error or fraud that might be prevented or detected by the control procedure, and

(b) the objective served by the control procedure. Organize your answer as follows:

Transcribed Image Text:

Control Procedure 1. Potential Error or Fraud That Might Be Prevented or Detected (a) Related Objective (b)