An auditor is testing a control that requires 'Three-way matching' before a payment is authorized. Which three documents must match?

Answer options:

Purchase Order, Receiving Report, Vendor Invoice

Purchase Requisition, Purchase Order, Check Copy

Vendor Invoice, Bank Statement, General Ledger

Sales Order, Shipping Document, Sales Invoice

How to approach this question

Recall the standard expenditure cycle control.

Full Answer

A.Purchase Order, Receiving Report, Vendor Invoice✓ Correct

Three-way matching verifies that: 1. We ordered it (Purchase Order), 2. We received it (Receiving Report), and 3. The price is correct (Vendor Invoice). This prevents paying for goods not ordered or not received.

Common mistakes

Confusing the expenditure cycle (buying) with the revenue cycle (selling).

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