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Key Controls | Transaction-Related Audit Objective | Test of Control | Substantive Test of Transaction | 1. Segregation of the purchasing, receiving, and cash disbursements functions. | Recorded acquisitions are for goods & services received. (Occurrence)Recorded cash disbursements are for goods & services received. (Occurrence) | Discuss with personnel & observe activities. | Review the acquisitions journal, general ledger, and accounts payable master file for large or unusual amounts. | 2. Independent reconciliation of the monthly bank statements. | Existing cash disbursement transactions are recorded. (Completeness)Recorded cash disbursement transactions are accurate. (Accuracy) | Examine bank reconciliations and observe their preparations. | Reconcile recorded cash disbursements with the cash disbursements on the bank statement (proof of cash disbursements).Compare cancelled checks with the related acquisitions journal and cash disbursements journal entries. | 3. Use of prenumbered voucher packages, properly accounted for. | Existing acquisition transactions are recorded. (Completeness) | Account for a sequence of vouchers. | Trace from a file of vendor’s invoices to the acquisitions journal. Review a sample of voucher packages for the presence of the purchase requisition, purchase order, receiving report and vendor invoice to verify that the accounts payable are owed by the Pinnacle Manufacturing. | 4. Use of prenumbered checks, properly accounted for. | Existing cash disbursement transactions are recorded. (Completeness) | Account for a sequence of checks. | Reconcile recorded cash disbursements with the cash disbursements on the bank statement (proof of cash disbursements). | 5. Use of prenumbered receiving reports, properly accounted for. | Existing acquisition transactions are recorded. (Completeness) |

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