Auditing

141. Vendors should be approved by Management before purchase department executes an order. If this is not done, then which of the following situations may arise?

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A. Purchases could be made from vendors whose product quality may not be good
B. Purchases may be made from related parties without management’s knowledge
C. Purchases could be made from vendors who may have offered price to manager purchases
D. Any of these
✅ The correct answer is option D.

150. An internal auditor discovered that fictitious purchases have been recorded by the purchase clerk. This indicates absence of which control?

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A. Purchase invoices are independently matched with purchase orders and goods received notes
B. Goods received notes requires the signature of individual who authorized the purchase
C. Routine checks are performed by internal auditor fortnightly.
D. Purchase function and production function are clubbed in one department
✅ The correct answer is option A.