Question 4 Case study (8 marks)

Reject Pty Ltd is a major manufacturer of industrial machinery. The auditor has identified its purchasing and payments system including

• The accounts payable department checks that there is a purchase requisition, purchase order and receiving record for each supplier invoice and then approves it for payment.
• The accounts payable department prepares a pre-numbered disbursement voucher and forwards it along with the supplier's invoice, purchase requisition, purchase order and receiving record to the financial accountant.
• The financial accountant prepares a cheque for each supplier, signs the cheque and records it in the cash disbursements journal. The cheque is immediately mailed to the supplier. Supporting documentation is returned to accounts payable for filing.