Page 24 - eBook Audit Of Financial Statement Components
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CHAPTER 2: AUDITING PROCEDURES ON
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EXPENSES
Expenditure represents outflows of economic resources arising in
the course of the ordinary activities of an enterprise when those
outflow result in decreases in equity. Expenditure is recognised
when there is a decrease in future economic benefits or an
increase of a liability that can be measured reliably (Puan Sri Datin
Dr. Mary Lee, 2007) .
Auditors should understand the purchase, payment and purchase
adjustment transactions processes when they audit the purchase
cycle.
“Expenditure is recognised when there is a decrease in future economic benefits or
an increase of a liability that can be measured reliably.”
The purchase cycle process includes
receiving requests from departments
Information which are usually accompanied by certain
flows in the
cycle through documentations to support the
numerous transaction, such as a requisition form.
accounts such
as: The purchasing department will make an
order for goods with the suppliers by
Purchase
completing a purchase order form.
Cash payments
Accounts The process of receiving and billing from
payable suppliers also involves documents such as
delivery notes and purchase invoices.
Purchase
returns and
discounts.
Journals, accounts and statements are
involved in the recording process, while a
payment voucher is a document used in
purchase and account payable payments.
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