Task 3: Purchases & Cash payments Flashcards
Ordering is only allowed from APPROVED SUPPLIERS accessed and set up only by specified individuals within the Org
Buying from unauthorised suppliers.
Could miss out on bulk buying opp
Blank order forms are kept secure (physical)
Orders being placed by staff who are not authorised to do so
There are recognised authority levels for orders above defined limits
Purchasing goods and services the company does not need (amount is controlled)
Could miss out on bulk buying opp
Where POs are computer generated, only authorised individuals, using secure logins, are able to do so
Orders being placed by staff who are not authorised to do so
Standard pre-numbered order forms are always used , stating quantity, price and delivery details
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
Regular review of orders placed but not received.
To ensure completeness and identify missing orders.
Could cancel if no longer needed , save money
Quantity and condition of goods received are properly checked.
Could pay for goods that didn’t receive or are sub-standard.
Waste. Extra cost
Pre-numbered GRNs are always used stating quantity, description, date received, condition
Check received and record of condition
Check for completeness.
Pre-numbered: Period end checks to ensure GRNI are accounted for in the correct period.
GRNs are SIGNED off for all goods received
Traceability
GRNs are matched to the order, which has been authorised
GRN records whats in box matches Supplier DN but still need to check its what was ordered.
Stated authority levels should exist for approving invoices (Org)
Avoid fraud through processing false invoices.
All invoices are approved for payment (Auth)
Avoid fraud through processing false invoices.
Take advantage of early payment discounts
Invoices are matched with Orders and GRNs
Check what was received was what was ordered and what was invoiced.
** Prices on invoices are agreed to standard supplier price lists and order forms (Arith & Acc)
Check for pricing errors, also fraud
** Arithmetic accuracy of invoices is checked and evidenced (Signed?)
Batch totals?
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)
Ensure PL is complete and accurate.
Pay suppliers correctly
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)
Check for input errors.
Could lead to overpayment etc.
Could check VAT total as well. Compliance
Regular reconciliation of PLCA and purchase ledger balances and reconciling items investigated and cleared.
Errors, accurate records and FSs
Period end checks to ensure GRNI are accounted for in the correct period.
Avoid inaccurate financial statements
Cheque books are securely located
Avoid fraud
Cancelled cheques are retained
Avoid fraud
Recognised list of authorised cheque signatories for all payments or approvals for BACS payments
Avoid fraud
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)
Check for errors
Complete & accurate records… FSs
Segregation
No one individual is involved in the whole transaction.
Reduced risk of Errors and Fraud
order goods
deal with the movement of goods
process invoices
pay the invoices
