ABC Retailers, a thriving retail company, implemented a structured purchasing process to manage its significant volume of
Question:
ABC Retailers, a thriving retail company, implemented a structured purchasing process to manage its significant volume of transactions efficiently. The company's internal controls over purchasing are designed to ensure accuracy, compliance, and efficiency.
Each purchase must be authorized by a department manager using a standardized purchase order form, ensuring that expenditures are necessary and approved at the appropriate level. The same manager responsible for ordering goods is also approving invoices.
The company employs a Purchase Order (PO) system, where orders are documented and tracked meticulously, enhancing the traceability and accountability of transactions. The POs are not regularly reviewed and reconciled with the corresponding invoices and receiving reports.
Upon the arrival of goods, they are checked against the PO, and a receiving report is completed. Inadequate training or insufficient staffing levels have led to occasional errors in the receiving reports and a failure to adequately verify the goods received. This discrepancy creates mismatches between what is ordered and what is actually received.
Invoices are processed and paid only if they align with the details on the PO and the receiving report. Invoices are sometimes not processed in a timely manner, leading to late payments. This delay not only strains supplier relationships but also incurs additional costs in the form of late fees.
what test of transactions you may complete?
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg