Buildwell Limited, a manufacturing company engaged in production of industrial components, has reported total purchases of 48 crores for the year…

Recorded purchases represent goods actually received/ services availed during the period (OCCURRENCE): Ensure purchases are not understated/ overstated by performing following audit procedures: Whether any fictitious vendors have been booked or purchases have been recorded by reviewing the vendor selection process followed by the entity and also performing procedures to ensure existence of the vendors.Whether the goods were received at the factory gate and whether there exists an entry in the security gate inward register.Whether quality inspection of goods was done.Whether a goods receipt note was prepared and signed by an appropriate client personnel.Whether the purchase invoice was approved as per delegation of authority and whether a 3 or 2-way match was done.Whether stock record has been updated by the stores personnel. In the given case, since purchases form a material component of the financial statements and weaknesses in controls have been indicated, the auditor must perform detailed substantive and control procedures as above to obtain sufficient and appropriate audit evidence that purchases recorded during the year represent genuine transactions relating to goods actually received or services availed. If these procedures provide satisfactory evidence, the occurrence assertion in respect of purchases may be considered as appropriately addressed; otherwise, appropriate modifications or reporting implications may arise.