Student Forums CIA Part 2: Practice of Internal Auditing Section II: Planning the Engagement Question ID: CIA 598 3.20 (Topic: D. Determine Engagement Procedures and Prepare

Question ID: CIA 598 3.20 (Topic: D. Determine Engagement Procedures and Prepare

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  • #136094

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    Ellie Dredge
    Participant

    Hi Brian / Kevin

    I don’t understand why the correct answer is D for this question. Could you clarify for me please

    Which of the following controls would help prevent overpayment of a vendor?

    A. Reviewing the account distribution for each expenditure.
    B. Approving the purchase order before ordering the material from the vendor.
    C. Requiring the check signer to mail the check directly to the vendor.
    D. Reviewing and canceling supporting documents when payment is issued.

    many thanks

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  • #136095

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    Kevin Hock
    Participant

    Hi Ellie,

    The key to this question is specifically overpayment. Choice D should prevent a payment from being issued twice (resulting in an overpayment) because a payment would not be made again if the documents were canceled. For example, this is why companies will stamp an invoice “PAID” when they send the payment, so that if someone else finds the document later, they will not think it is unpaid and pay it again.

    None of the other choices specifically relate to overpayment.

    Does that helps?

    Kevin

    #136096

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    Ellie Dredge
    Participant

    Brilliant thank you very much that does help

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