Procurement and Audit notes revision

Purchase controls
GDC, a limited liability company, operates a computerized purchase system. Invoices and credit notes are posted to the purchases ledger the purchases ledger department. The computer subsequently raises a cheque when the invoice has to be paid.
List the controls that should be in operation:
(a) Over the addition, amendment and deletion of suppliers, ensuring that the standing data only includes suppliers from the company’s list of authorised suppliers
(b) Over purchase invoices and credit notes, to ensure only authorised purchase invoices and credit notes are posted to the purchase ledger

(a) Controls over the standing data file containing suppliers’ details will include the following.
(i) All amendments/additions/deletions to the data should be authorised a responsible official. A standard form should be used for such changes.
(ii) The amendment forms should be input in batches (with different types of change in different batches), sequentially numbered and recorded in a batch control book so that any gaps in the batch numbers can be investigated. The output produced the computer should be checked to the input.
(iii) A listing of all such adjustments should automatically be produced the computer and reviewed a responsible official, who should also check authorization.
(iv) A listing of suppliers’ accounts on which there has been no movement for a specified period should be produced to allow decisions to be made about possible deletions, thus ensuring that the standing data is current. The buying department manager might also recommend account closures on a periodic basis.
(v) Users should be controlled use of passwords. This can also be used as a method of controlling those who can amend data.
(vi) Periodic listings of standing data should be produced in order to verify details (for example addresses) with suppliers’ documents (invoices/ statements).

(b) The input of authorized purchase invoices and credit notes should be controlled in the following ways.
(i) Authorization should be evidenced the signature of the responsible official such as the
Chief Accountant. In addition, the invoice or credit note should show initials to demonstrate that the details have been agreed: to a signed GRN; to a purchase order; to a price list; for additions and extensions.
(ii) There should be adequate segregation of responsibilities between the posting function, inventory custody and receipt, payment of suppliers and changes to standing data.
(iii) Input should be restricted use of passwords linked to the relevant site number.
(iv) A batch control book should be maintained, recording batches in number sequence. Invoices should be input in batches using pre-numbered batch control sheets. The manually produced invoice total on the batch control sheet should be agreed to the computer generated total. Credit notes and invoices should be input in separate batches to avoid one being posted as the other.
(v) A program should check calculation of sales tax at standard rate and total of invoice. Nonstandard sales tax rates should be highlighted.

Procurement and Audit notes revision

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