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Sir i have 2 doubts
1) a person performs reconciliation and another person reviews it. Does this REVIEW by another person means segregation of duties?
2) there was a control given wherein the purchase officer agreed the quited price to the agreed price list
The resultant test of control given was:
Select a sample of purchase orders for evidence of price having being agreed to price list like signature.
And also agree to the authorised price list to test the effectiveness of controlHowever how can they be sure that the purchase officer has signed after checking the price list.
Since if the supplier quotes a right price and thr officer does not checks the quoted price with the price list…it will still be the right price, even though the control will not have taken place.1) Short answer – no. Segregation of duties is an example of a “control activity” as described on page 71 of our notes https://opentuition.com/acca/aa/acca-audit-assurance-aa-notes
A reconciliation is also a control activity. Reviewing a reconciliation (to see that it was done) is a monitoring activity.
Testing controls does not make the auditor “sure” of anything (that’s why substantive procedures are a requirement). The point here is, that if the purchase officer signed as evidence that they had done a check, but had not in fact done it, they would most likely be “found out” by the test of the control if there are price changes.
But sir ensuring that the person reconciled does not reperform it ensures segregates the duties?
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