Expenditure Cycle Pt 2

Question 1

What is the difference between an invoice and a purchase order?

Answer 1

Invoice - vendor sends to a buyer to request payment once a purchase order has been FULFILLED

Question 1

One of the threats associated with the process and activity of receiving and storing goods is:

a.
errors in counting.

b.
errors in vendor invoices.

c.
requests for unnecessary items.

d.
kickbacks.

Question 2

What does kickback mean in the expenditure cycle?

Answer 2

It is a potential threat, aka bribery, where a vendor offers the buyer something of value to incentivise the buyer to purchase from them

Question 3

What is EDI?

Answer 3

Electronic Data Interchange

Allows companies to exchange information electronically rather than by paper
eg purchase orders, shipping status, invoices, payment confirmations

Question 4

How can a buyer mitigate the threat of paying too high a price for goods ordered?

Answer 4

Only using approved suppliers and soliciting competitive bids to understand the pricing landscape across other suppliers/vendors

Question 5

What is generally not included on a receiving report?

Answer 5

The price of items

Question 6

What is the best way to avoid paying an invoice twice?

Answer 6

Never authorising payment of a photocopy of an invoice