Integrated Measurement Systems Inc. (IMS) is a Canadian public company that manufactures high-end measuring devices used primarily in the oil and natural gas industries.
Ted Pollock, CEO of IMS, is a proponent of strong corporate governance. He has spent the last year strengthening IMS's internal control environment. He believes that organizations that demonstrate good corporate governance practices will be perceived favourably by the markets.
Ted has some concerns regarding the purchasing process. He has provided you with a description of the purchasing process in Exhibit 1.
Required
(a) Identify the existing key internal controls within the purchasing process and relate each to the appropriate control objective.
(b) Identify the internal control weaknesses within the purchasing process and recommend improvements.
(c) To further strengthen the control environment, Ted is considering creating an internal audit department. Outline the kinds of activities this group could be involved in.