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CS Professional · Internal and Forensic Audit · Internal Audit Tools and Techniques

An internal auditor at Sundaram Textiles Ltd wants to confirm that every purchase invoice paid during the quarter is supported by a goods receipt note and an approved purchase order. Which technique is most directly suited to this objective?

Vouching of payments to supporting documents is the right technique. It traces each recorded payment back to the purchase order, goods receipt note and invoice, confirming authorisation and receipt. Ratio analysis, stock counts and creditor confirmations test other objectives and do not establish document support for payments.

  1. AVouching of payments to supporting documentsCorrect
  2. BAnalytical review of gross profit ratio
  3. CPhysical verification of closing stock
  4. DExternal confirmation of creditor balances

Explanation

Vouching traces recorded transactions back to the supporting documents such as the purchase order, GRN and invoice, which is exactly what is required here. Analytical review only highlights unusual trends and does not test document support. Stock verification and creditor confirmation address different assertions.

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