Chapter 6 HomeworkDesigning a Control

Name:

Date:

Vendor Master Data File Control - Review

Background

1. As part of the month end (external) financial reporting close process, the AP Supervisor runs a: (a) Vendor Master Data File ADDITIONS Report, and (b) Vendor Master Data File MODIFICATIONS Report. She prints a screen shot of the previous months last five dated transactions and a screen shot of this months first five dated transitions.

2. (S)he obtains the Vendor Master Data File Information Packets [Packet] consisting of a fully executed and approved Vendor Master Data File Form supported by the TIN check, IRS Form W-8/9, and other required support for additions and modifications that were generated for the month. (S)he places the tickmark by every addition or modification that has a supporting Packet. (S)he places the 0 tickmark by every addition or modification that is not supported by a Packet, indicating it has been selected for further review.

3. (S)he visually scans each report looking for unusual or unfamiliar transactions, inclusive of repetitive entries made to the same vendor; (s)he places the tickmark 0 by each indicating it has been selected for further review.

4. (S)he then judgmentally selects 6 additions and 6 modifications, and randomly selects 6 additions and 7 modifications (a total of 25); (s)he places the tickmark 0 by each indicating it has been selected for further review.

5. Describe here what the AP Supervisor looks for and/or does to each Packet selected to ensure it is valid, accurate, complete, and authorized. [See Linking Financial Statement Assertions reference]

ANSWER:

BACKGROUND

ITEM	DESCRIPTION
WHO
WHAT
WHEN
HOW
WHY

CONTROL

INITIATION

PERFORMER

REVIEWER

RETENTION

QUESTIONS

1. Considering the existence and occurrence financial statement assertions:

1. What do you think could go wrong (WCGW) in terms of an input error or fraud at this juncture?
2. Does the control address all WCGW concerns in terms of an input error or fraud?
   1. If not, rewrite the control to address this omission.

ANSWER:

2. What is the control precision (i.e. dollar amount of error that it will detect?)

ANSWER:

3. Using the control types described in the textbook and/or lecture power point, what type of control is this? Remember that a single control can fall under several types, so list all that apply.

ANSWER: