A Client's Purchasing System Ends with the Recording of a Liability

question 101

Multiple Choice

A client's purchasing system ends with the recording of a liability and its eventual payment. Which of the following best describes auditors' primary concern with respect to liabilities resulting from the purchasing system?

• A)Accounts payable are not materially understated.
• B)Authority to incur liabilities is restricted to one designated person.
• C)Acquisition of materials is not made from one vendor or one group of vendors.
• D)Commitments for all purchases are made only after established competitive bidding procedures are followed.

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Definitions:

CATHOLIC

Universal in extent; embracing everything or all important points.

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Individuals who share one or both parents in common, typically referred to as brothers or sisters.

Peers

Refers to individuals who are of similar age, status, or interest, often playing significant roles in socialization and influence during development.