You have been asked to appraise the adequacy of control over the purchase and use of direct and indirect materials and supplies. In order to appraise the adequacy of the control over this item, you ask the following questions:

1. Are quotations, based on uniform specifications, received from several qualified supply sources for all major commodities?

2. Are the quantities that are received independently verified by someone outside the purchasing and accounting departments?

3. Is quality inspection performed by someone outside the purchasing department?

4. Are the facilities for and the control over the storing and issuance of materials adequate?

5. Does the cost of loss of materials in yields conform to reasonable standards?

6. Are yields of scrap and by-products controlled?

7. Is the grading and inspection of products produced independent of the operating, sales, and billing responsibilities?

8. Is the internal control over payment of accounts payable invoices for materials and services good?

Required:
Explain why each of the questions is relevant to evaluating control. Tie each item to key control concepts and describe the ramifications of a "no" response to each item.

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