Raw material ordering process

1. To maintain and control product quality a limited number of trusted suppliers are used.

2. The production manager oversees raw material inventory. Orders are placed based on current production orders and quantities of raw material currently on hand with next

day delivery where possible.

3. No formal purchase order system is used.

Raw material warehousing procedures

1. The warehouse personnel are trusted, long-term employees.

2. One of the warehousing staff ensures that all goods received, primarily raw materials, are in good order and signs the couriers' delivery dockets in acknowledgment of

materials received.

3. Movement of in and out of the warehouse is not recorded, but the production manager monitors stock levels and movements daily.

Note: Finished goods are warehoused in a separate secured area that only the production manager and his assistant have access to.

Required:

Identifies and explains control weaknesses associated with the purchases and accounts payable outlined above.