An Entity's Procurement System Ends with the Assumption of a Liability

question 7

Multiple Choice

An entity's procurement system ends with the assumption of a liability and the eventual payment of the liability. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the procurement 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:

Customer Relationship Management

A strategy for managing an organization's relationships and interactions with customers and potential customers.

Customer Satisfaction

The degree to which a product or service meets or exceeds customer expectations.

Dollar Fill Rate

A metric that measures the value of goods shipped on time versus the total value of the order.

Pre-Transaction

Activities and considerations that occur before the actual purchase or transaction takes place, such as research or comparison.