Tutorial 2 Purchasing Process Flashcards
(9 cards)
Types of purchasing
Technical - technical installations, machinery, raw materials
- technical specification
- purchasing department serve technical management
Commercial purchase - fashion items food
- price and customer attractiveness
- PD serve commercial management
Administrative purchase - auxiliaries and materials, office supplies
- follow correct procedures
- PD head of purchasing
Info needs
Purchasing costs
Price variances
Contracts concluded
Proposals received
Orders places, orders to be received
Reliability of suppliers
Steps in purchasing process
Impulse
Supplier selection
Order
Receive goods or services
Receipt invoice
Impulse
1) a signal that the supply system has reached the order level
2) a purchase request by another department not linked to the inventory system
3) signalling an opportunity in the market to b enable to do a good deal
Supplier selection
A ) requesting proposals
B) receipt of proposals
C) choice of supplier and conclusion of the contract
Order
After concluding the contract with the preferred supplier in which price and other contract terms are stipulated
An employee of the purchasing department will be able to place the order
The data of which will have to be entered into the purchase master file
Risks
Risk of paying a higher price than necessary
Risk of receiving less or inferior products/ services than ordered
Fraud by a purchasing employee
Most relevant preventative Controls
Forecasts and budgets :
-purchasing budget as a standard to compare actual purchasing costs, quality requirements, standard prices
Segregation of duties :
-between the purchasing department (authorising function), the warehouse (function of custody ) and the accounting department (recording and checking )
Procedures and guidelines :
For requesting proposals, concluding contracts, checking invoices
Detective controls
Analytical reviews :
-Such as purchasing costs v budget, price variances
Reconciliations:
Decrease purchase order file = increase inventory file + price variances = increase accounts payable file
Detailed checks : Invoice check (accuracy of prices and quantities received)
