Question 1

For each the following situations, evaluate the segregation of duties and describe any deficiency that you found. Indicate possible error that might occur because of the inadequate segregation of duties. Recommend the additional control that should be implement by the company.

Situations:

f. The purchasing department of Big Dutch is organized around three purchasing agents. The first is responsible for ordering electrical gear and motors, the second orders fabrication material, and the third orders nuts and bolts and other smaller supplies that go into the assembly process. To improve the accountability to vendors, all receiving slips and vendor invoices are sent directly to the purchasing agent placing the order. This allows the purchasing agent to better monitor the performance of vendors. When approved by the purchasing agent for payment, the purchasing agent must forward (a) a copy of the purchase order, (b) a copy of the receiving slip, and (c) a copy of the vendor invoice to accounts payable for payment. Accounts payable will not pay an invoice unless all three items are present and match as to quantities, prices, and so forth. The receiving department reports to the purchasing department.