IDENTIFICATION OF AUDIT TESTS FOR THE EXPENDITURE CYCLE (ACQUISITIONS AND CASH DISBURSEMENTS): The Winery at Chateau Americana LEARNING OBJECTIVES After completing and dicrming this case, you should be able to: Recognize common business documents used wiff purchases and cash Recogmze common control activities used to process purchases and cash Identi$ control activities that reduce the likelihood of material misstatements and link the activities to management assertions Design tests of controls for control activities related to purchases and cash Design substantive tests of transacons to detect material misstatements for nan-payroll accounts in the expenditure cycle Design analytical tests to detect potential material misstatements for non- payroll accounts in 'he expenditure cycle Design substantive tests of balances to detect material misstatemen= for accounts Ie Link tests of controls and substantive tests to management assertions related to purchases , cash payments, and accounts payable Identify significant deficiencies and matenal weaknesses for nan-payroll expenditure cycle accounts INTRODUCTION Chateau Americana (CA) has an annual production of approximately 385,000 cases of wine. Production of e 385,DW cases of sine requires roughly 3,200 tons of grapes. One-fourth of 'he needed grapes are harvested from CA's 125-acre vineyard, the remaimng grapes are predominantly purchased from California vineyards. Other purchases associated mth the producon of wine include oak barrels, bottles, cork, neck '"Tappers, and labels. CA also has nan payroll administraave: marketing, and maintenarece experditures associated with its wine operations. Markelng expenditures such as priority di5Tibuon, special promotions, and print advertising have substantially increased in the past year to improve CA's market penetraaon_ A. - 31