Task 3: Purchases & Cash payments

Question 1

Ordering is only allowed from APPROVED SUPPLIERS accessed and set up only by specified individuals within the Org

Answer 1

Buying from unauthorised suppliers.

Could miss out on bulk buying opp

Question 2

Blank order forms are kept secure (physical)

Answer 2

Orders being placed by staff who are not authorised to do so

Question 3

There are recognised authority levels for orders above defined limits

Answer 3

Purchasing goods and services the company does not need (amount is controlled)

Could miss out on bulk buying opp

Question 4

Where POs are computer generated, only authorised individuals, using secure logins, are able to do so

Answer 4

Orders being placed by staff who are not authorised to do so

Question 5

Standard pre-numbered order forms are always used , stating quantity, price and delivery details

Answer 5

So that the company can control their issue. A copy should be sent to Goods In and a copy to Accounts.

To ensure completeness and identify missing orders

Question 6

Regular review of orders placed but not received.

Answer 6

To ensure completeness and identify missing orders.

Could cancel if no longer needed , save money

Question 7

Quantity and condition of goods received are properly checked.

Answer 7

Could pay for goods that didn’t receive or are sub-standard.

Waste. Extra cost

Question 8

Pre-numbered GRNs are always used stating quantity, description, date received, condition

Answer 8

Check received and record of condition

Check for completeness.

Pre-numbered: Period end checks to ensure GRNI are accounted for in the correct period.

Question 9

GRNs are SIGNED off for all goods received

Answer 9

Traceability

Question 10

GRNs are matched to the order, which has been authorised

Answer 10

GRN records whats in box matches Supplier DN but still need to check its what was ordered.

Question 11

Stated authority levels should exist for approving invoices (Org)

Answer 11

Avoid fraud through processing false invoices.

Question 12

All invoices are approved for payment (Auth)

Answer 12

Avoid fraud through processing false invoices.

Take advantage of early payment discounts

Question 13

Invoices are matched with Orders and GRNs

Answer 13

Check what was received was what was ordered and what was invoiced.

Question 14

** Prices on invoices are agreed to standard supplier price lists and order forms (Arith & Acc)

Answer 14

Check for pricing errors, also fraud

Question 15

** Arithmetic accuracy of invoices is checked and evidenced (Signed?)

Answer 15

Batch totals?

Question 16

Regular reconciliation of suppliers statements with PL balances for accurate supplier account information. (especially good to ensure PL is complete & accurate as the comparison is with 3rd party)

Answer 16

Ensure PL is complete and accurate.

Pay suppliers correctly

Question 17

Controls exist for processing purchase invoices (eg Batch totals) (Arith acc)

Eg tell system how many invoices and the overall total and then check the batch totals on the system (ie another person)

Answer 17

Check for input errors.
Could lead to overpayment etc.
Could check VAT total as well. Compliance

Question 18

Regular reconciliation of PLCA and purchase ledger balances and reconciling items investigated and cleared.

Answer 18

Errors, accurate records and FSs

Question 19

Period end checks to ensure GRNI are accounted for in the correct period.

Answer 19

Avoid inaccurate financial statements

Question 20

Cheque books are securely located

Answer 20

Avoid fraud

Question 21

Cancelled cheques are retained

Answer 21

Avoid fraud

Question 22

Recognised list of authorised cheque signatories for all payments or approvals for BACS payments

Answer 22

Avoid fraud

Question 23

Regular Bank Rec comparing Cash Book to Bank statement and reconciling items investigated and cleared. (especially good to ensure cash book is complete & accurate as the comparison is with 3rd party)

Answer 23

Check for errors

Complete & accurate records… FSs

Question 24

Segregation
No one individual is involved in the whole transaction.
Reduced risk of Errors and Fraud

Answer 24

order goods
deal with the movement of goods
process invoices
pay the invoices

Question 25

Purchase orders sequentially numbered

Answer 25

unfulfilled orders cannot be effectively monitored which could result in stock-outs leading to a loss of customer goodwill….