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TEST
The following is an extract of a working paper containing the results of a test of controls in the accounts payable area:
Selected a number of suppliers' invoices and checked that the pricing and discount terms have been reviewed and authorised by the purchase manager.
RESULT
Four out of 50 invoices tested had not been authorised and incorrect discounts were recorded for these invoices. A follow-up of the four samples with deviations did not highlight a pattern or specific reason for the errors.
CONCLUSION
Accepted, as the errors in discounts claimed were immaterial.
REQUIRED
Problem (a) Identify the key assertion addressed by the test procedure.
Problem (b) Provide an explanation as to why the conclusion reached is appropriate or inappropriate.
Problem (c) Outline the key additional procedure that you believe needs to be performed.
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