Problem:
Evaluate the following statement by an auditor concerning tests of acquisitions and cash disbursements:
In selecting the acquisitions and cash disbursements sample for testing, the best approach is to select a random month and test every transaction for the period. Using this approach enables me to thoroughly understand internal controls because I have examined everything that happened during the period. As a part of the monthly test, I also test the beginning and ending bank reconciliations. At the completion of these tests I feel I can evaluate the effectiveness of internal control.