Trading transaction is the next step taken by the auditor to examine the transactions. Main purpose of trading transactions are purchase, purchase return, sales return and sales or at the same time its objective is to detect misappropriation of goods so by this the auditor should take good care of this trading transaction to prevent this type of misappropriation of goods. The most prominent purpose behind this is to confirm that every purchase bill has been recorded in purchase books which include the invoice in which payments are made for actual goods.
What is internal control for purchase?
There are some guidelines that are mandatory for the auditor to verify the compete internal control related to purchasing. It is the duty of the auditor to study the adequacy of this system in an organization. Some of the points which are important which includes department which requires materials which will send the purchase requisition to that particular department. Another thing was done after getting an authorized requisition in which different suppliers give different quotations. On the other hand when material receipt note received it will issue this note to the good receiving department only after checking and verification of the goods with purchase order.
What are the duties of the auditor in this whole process?
The auditor is responsible for checking and verifying things like records of all purchase order. Verification of price, quality and payment of purchase invoices of the terms. It is very important that the goods purchased are for business purpose and not for some personal use or use of any of the partner. Most importantly the auditor should verify the statements of supplier’s account. The auditor is responsible for sale of capital goods and to check sale through sale invoices and no sale invoices to be left unrecorded in the sale invoices.
What is the role of the auditor on sale or sale return basis?
The auditor is responsible to clarify the payment and to verify the processes and the documentation regarding those payment. On the other hand sale invoice can be raised only after the confirmation received from the customer. Mainly the goods sent or sale on return basis are to be considered as closing stocks only when it is approval of sale not received or time is not expired. A copy of the sale invoice should be sent to the customer after all the procedures are done with immediate effect.