AUI3702ASSIGNMENT 2
SEMESTER 1 2025 DETAILED
SOLUTIONS, REFERENCES &
EXPLANATIONS UNIQUE
NUMBER DUE DATE 2025
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,QUESTION 1
AUI3702
1.1.
Based on the structured audit engagement planning process, the following six
steps are crucial when planning an internal audit of the procurement cycle:
1. Obtain an Overview Understanding of the Procurement Process
o Review procurement policies, procedures, and workflow to gain a high-
level understanding of how purchases and payments are processed.
o Identify key departments and personnel involved in the procurement
cycle.
2. Establish Preliminary Contact with Procurement and Finance Personnel
o Conduct meetings with key stakeholders such as procurement officers,
finance personnel, and management to discuss the procurement
process and existing controls.
o Identify any changes in procurement policies or risk areas.
3. Obtain a Comprehensive Understanding of Procurement Controls
o Evaluate internal controls over procurement, including authorization
of purchases, supplier selection, payment processing, and
recordkeeping.
o Review previous audit reports and findings to identify recurring
weaknesses.
4. Identify Risk Areas in the Procurement Cycle
o Assess risks such as unauthorized purchases, fraudulent
transactions, incomplete recording of purchases, duplicate
o payments, and supplier contract violations.
o Determine the impact and likelihood of these risks occurring.
, 5. Define Audit Objectives, Scope, and Resources
o Clearly outline the audit objectives related to validity, completeness,
valuation, and cut-off of procurement transactions.
o Define the audit scope, covering key transactions, document
verification, and internal controls testing.
o Allocate resources, including personnel, time, and tools required to
execute the audit.
6. Develop the Audit Engagement Work Programme
o Prepare a detailed audit work programme outlining specific audit
procedures, sampling methods, documentation review, and
verification techniques.
o Determine the audit approach, including test of controls,
substantive testing, and data analytics techniques to be used.
o Obtain final approval from management before commencing the audit.
1.2.
Audit objective Audit procedure
Validity: To determine • Select a sample of recorded purchases from the purchase
that only valid journal and inspect the related goods received note for
purchases are evidence that the details of the goods received were
recorded inspected during the initial receipt of the delivery.
• Select a sample of recorded purchases from the purchase
journal and inspect the related purchase order for evidence
of authorisation.
• Follow the details of purchases selected from the purchase
journal through to the original order as well as the supplier’s
invoice and statement.
SEMESTER 1 2025 DETAILED
SOLUTIONS, REFERENCES &
EXPLANATIONS UNIQUE
NUMBER DUE DATE 2025
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
,QUESTION 1
AUI3702
1.1.
Based on the structured audit engagement planning process, the following six
steps are crucial when planning an internal audit of the procurement cycle:
1. Obtain an Overview Understanding of the Procurement Process
o Review procurement policies, procedures, and workflow to gain a high-
level understanding of how purchases and payments are processed.
o Identify key departments and personnel involved in the procurement
cycle.
2. Establish Preliminary Contact with Procurement and Finance Personnel
o Conduct meetings with key stakeholders such as procurement officers,
finance personnel, and management to discuss the procurement
process and existing controls.
o Identify any changes in procurement policies or risk areas.
3. Obtain a Comprehensive Understanding of Procurement Controls
o Evaluate internal controls over procurement, including authorization
of purchases, supplier selection, payment processing, and
recordkeeping.
o Review previous audit reports and findings to identify recurring
weaknesses.
4. Identify Risk Areas in the Procurement Cycle
o Assess risks such as unauthorized purchases, fraudulent
transactions, incomplete recording of purchases, duplicate
o payments, and supplier contract violations.
o Determine the impact and likelihood of these risks occurring.
, 5. Define Audit Objectives, Scope, and Resources
o Clearly outline the audit objectives related to validity, completeness,
valuation, and cut-off of procurement transactions.
o Define the audit scope, covering key transactions, document
verification, and internal controls testing.
o Allocate resources, including personnel, time, and tools required to
execute the audit.
6. Develop the Audit Engagement Work Programme
o Prepare a detailed audit work programme outlining specific audit
procedures, sampling methods, documentation review, and
verification techniques.
o Determine the audit approach, including test of controls,
substantive testing, and data analytics techniques to be used.
o Obtain final approval from management before commencing the audit.
1.2.
Audit objective Audit procedure
Validity: To determine • Select a sample of recorded purchases from the purchase
that only valid journal and inspect the related goods received note for
purchases are evidence that the details of the goods received were
recorded inspected during the initial receipt of the delivery.
• Select a sample of recorded purchases from the purchase
journal and inspect the related purchase order for evidence
of authorisation.
• Follow the details of purchases selected from the purchase
journal through to the original order as well as the supplier’s
invoice and statement.
