Business rules implement internal controls. Review Table 6.1 and describe which business rules implement segregation of duties. Classify each of those business rules as obligatory, prohibited, or allowed as described in Chapter 3.

TABLE 6.1
Using Business Rules to Implement Internal Controls

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Partner Authority/ Process Application Controls Steps Intention Action Access Controls Partner preparing purchase orders cannot modify product inventory records, receive items, or pay suppliers. Place Order Order products from reliable suppliers at the best available prices to meet required delivery Manager approval required for orders >$5,000; partner System must provide purchase order number control, default values, and range and limit checks and must create ordering products must not manage inventory. time. an audit trail. Receive Record receipt of items promptly and accurately. Partner receiving items Partner receiving items cannot modify purchase orders or inventory records; they cannot view purchase order quantity System must only allow partner to enter the number of items received, Items must not be same partner who ordered the items. subject to range and limit checks on quantities received; date of receipt ordered information. defaults to current date. Assess Items Reject defective items; Partner assessing items Partner assessing items cannot modify purchase System must only allow partner to record the record acceptance must not be same partner promptly and accurately. who ordered the items. assessment; date of assessment defaults to orders or inventory records. current date. Place in Place accepted items in proper inventory locations promptly. Partner placing the items Partner placing items in inventory cannot modify purchase orders. System must specify Inventory where items are to be in inventory must not be same partner who ordered the items. placed. Return defective items to suppliers promptly. Send Items Manager approval required for defective Partner returning items cannot modify supplier System must supply supplier return address. Back information. items return. Pay Supplier Pay suppliers accurately, taking cost-effective Partner making payment Partner making payments cannot modify purchase System must supply supplier payment must not be partner who ordered items or discount terms. orders and receipt/ information and amount of payment; payment date defaults to current date. acceptance records. received/ accepted items.