Summary
Summary Auditing Acquisitions and Payments Cycle
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- University Of South Africa (Unisa)
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ACQUISITION & PAYMENTS CYCLEOrdering of Goods
Function Source document & who
*section/ department initiates *Manual system - hard copy requisitions from departments requiring goods delivered to the buying department.
orders *Buying clerk manually complete a multicopy preprinted, sequenced purchase order after checking availability & price of goods & referring
Documents to supplier catalogues for descriptions & codes.
Requisition *Buying clerk refer to a hard copy list of approved suppliers or may choose a supplier himself.
Purchase order form *Chief buyer scrutinise all purchase orders & approve them by signature.
Risks *Order placed by phone, & hard copy sent as confirmation by fax or post
*order of incorrect or unnecessary Control Activities
goods, resulting in liquidity *Order clerks shouldn't place an order without receiving and cross referencing to an authorised requisition.
problems & wastage *Prior to requisition inventory/production personnel confirm goods are necessary especially where preset reorder levels &
*Ordering unauthorised goods quantities are used as basis for requisition.
resulting in losses to co.(fraud) *Before order is placed, a supervisor/senior buyer should:
*Requisitions not acted upon or - check order to requisition for accuracy & authority
orders not placed timeously -Review order for suitability of supplier, reasonableness of price & quantity & nature
*Obtaining inferior quality goods *Co. should have an approved supplier list if not buyer should seek quotes etc. & contact supplier to confirm availability & delivery dates.
*Paying unnecessarily high prices *Before supplier is approved, senior personnel should carefully evaluate the co. in respect of their reliability & quality & price of its goods.
*Orders placed with suppliers not *Ordering dep. file requisitions sequentially by dep. & frequently review files for requisitions which haven't been cross referenced to order.
filled/not timeously filled *Copy of order filed sequentially & file sequenced checked & frequently cross referenced to GRN, to confirm goods ordered are received.
*Order forms misused, e.g placing * Blank order forms subject to sound stationery control.
orders for private purchases
Receiving of Goods
Function Source document & who
*resp. for receiving goods & *Copy of all purchase orders sent to receiving bay & filed in numerical sequence.
acknowledging co.’s acceptance *On arrival of goods, receiving clerk match purchase order reference on suppliers DN to purchase order to determine goods to be received.
*Receiving clerk count goods received against DN & purchase order & check quality of goods.
Documents *Deliveries incorrect or rejected clearly marked on both suppliers DN & amendment signed by supplier’s employee & receiving clerk.
Supplier delivery note (DN) *Receiving clerk make out sequenced GRN for goods actually received, cross referencing it to purchase order & DN.
Goods Received Note (GRN) *Goods transferred from receiving bay (physically separate section of warehouse) , to inv. Dep. responsible for custody of inventory.
Risks Control Activities
acceptance of: *Resp. for receiving goods designated to a goods receiving section,physically secured & access controlled.
– short deliveries as full deliveries *On arrival of delivery vehicle, goods offloaded in the presence of goods receiving clerk who should:
– damaged and broken items - Obtain supplier DN from delivery personnel & by referring to order number thereon,locate the purchase order ( filed numerically);
– items not ordered -Check quantity & description delivered against purchase order & customer DN
– goods not of required type or Perform test of the condition of goods delivered, e.g broken or wet boxes
quality -Reject incorrect deliveries & clearly identify rejections on both copies of DN & purchase order
*GRN not made out accurately - Accept goods short delivered & identify such goods clearly on DN & purchase order (quantity actually accepted must be clearly identified)
or completely - include on GRN, only goods accepted & ensure suppliers’ personnel sign both delivery note incl. all amendments,e.g short deliveries
*No GRN made out - sign the supplier delivery note;
* theft by employees or outside * On transfer of goods to warehouse (custody), warehouse clerk compare physical goods to GRN & acknowledge receipt by signature.
parties, e.g collusion with supplier Any discrepancies reported to warehouse controller immediately.
delivery personnel
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