A company's internal control procedures over the acquisition cycle should prevent the preparation of a voucher for goods that have not yet been received. Which of the following is the best procedure to assure vouchers are not prepared for goods not received?

The audit of the acquisition and payment cycle (APC) evaluates whether the accounts affected by acquisitions and cash disbursements are fairly presented according to accounting standards.  The audit involves: Identifying business functions, transactions, accounts, and documents Identifying potential misstatements Assessing control risk Designing tests of controls and substantive tests of transactions  The five phases of the acquisition and payment process are: Requisition for goods or services, Purchase of goods or services, Receipt of goods or services, Approval of items for payment,... Show more

The audit of the acquisition and payment cycle (APC) evaluates whether the accounts affected by acquisitions and cash disbursements are fairly presented according to accounting standards. 

The audit involves:
Identifying business functions, transactions, accounts, and documents
Identifying potential misstatements
Assessing control risk
Designing tests of controls and substantive tests of transactions 

The five phases of the acquisition and payment process are: Requisition for goods or services, Purchase of goods or services, Receipt of goods or services, Approval of items for payment, and Cash disbursements. 
The overall objective of the audit is to ensure the reliability and accuracy of the affected accounts. 

Tests of controls and substantive tests of transactions are both audit procedures that are performed during audits to determine if a company's financial statements are accurate and free of material misstatements. The results of these tests can be used to reduce the amount of audit work required. 

Tests of controls are conducted regardless of the transaction amount, and the goal is to determine if a client's controls are effective at preventing or detecting material misstatements. One type of test of controls is reperformance, where the auditor initiates a new transaction to see how the controls are used in real time. This is considered one of the more reliable tests. 
Substantive testing, also known as substantive procedures, involves gathering samples to identify material misstatements in a client's accounting records or other data. These tests directly examine the financial data, account balances, transactions, and disclosures. Substantive testing is required to verify that a company's financial records are complete, relevant, and accurate. 
Tests of controls are short, quick audit tests, while substantive procedures require more detailed audit work. Substantive testing is ideal when there are higher risks or when there's a need for detailed verification. Control testing, on the other hand, shines when evaluating internal controls and identifying weaknesses in the control environment. 
Accounts payable (AP) is the money a business owes its suppliers for goods and services purchased on credit. It is a current liability in the balance sheet, representing the total of approved and unpaid invoices from the suppliers. 
 

Related Tests: 

Auditing & Assurance 101 Practice Test: Auditing Tests in the Sales and Collection Cycle - Accounts Receivable

Auditing & Assurance 101 Practice Test: Audit of the Sales and Collection Cycle - Tests of Controls and Substantive Tests of Transactions

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