The review effective internal control for purchases on pg 248-249 is given below What major safeguards should

 

The review effective internal control for purchases on pg 248-249 is given below

   

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What major safeguards should be built into a system of internal control for purchases of merchandise? A goal of a good internal control program is to prevent fraud/theft, improve accounting procedures, and adherence to them. First, review effective internal controls over purchases on pp. 248-249. Then come up with at least three examples. Think of a specific business/organization, such as a bookstore, cafeteria, your current or future small business. Separating duties among employees provides a system of checks and balances. In a small business with just a few employees, it might be difficult or impossible to separate duties. However, the business should design as effective a set of control procedures as the company s resources will allow. Effective systems have the following controls in place: 1. All purchases should be made only after proper authorization has been given in writing. 2. Goods should be carefully checked when they are received. They should then be compared with the purchase order and with the invoice received from the supplier. 3. The purchase order, receiving report, and invoice should be checked to confirm that the information on the documents is in agreement. 4. The computations on the invoice should be checked for accuracy. 5. Authorization for payment should be made by someone other than the person who ordered the goods, and this authorization should be given only after all the verifications have been made. 6. Another person should write the check for payment.AHO OT KIGN39A 7. Prenumbered forms should be used for purchase requisitions, purchase orders, and checks. The numbers of the documents issued should be verified periodically to make sure that all. forms can be accounted for. What major safeguards should be built into a system of internal control for purchases of merchandise? A goal of a good internal control program is to prevent fraud/theft, improve accounting procedures, and adherence to them. First, review effective internal controls over purchases on pp. 248-249. Then come up with at least three examples. Think of a specific business/organization, such as a bookstore, cafeteria, your current or future small business. Separating duties among employees provides a system of checks and balances. In a small business with just a few employees, it might be difficult or impossible to separate duties. However, the business should design as effective a set of control procedures as the company s resources will allow. Effective systems have the following controls in place: 1. All purchases should be made only after proper authorization has been given in writing. 2. Goods should be carefully checked when they are received. They should then be compared with the purchase order and with the invoice received from the supplier. 3. The purchase order, receiving report, and invoice should be checked to confirm that the information on the documents is in agreement. 4. The computations on the invoice should be checked for accuracy. 5. Authorization for payment should be made by someone other than the person who ordered the goods, and this authorization should be given only after all the verifications have been made. 6. Another person should write the check for payment.AHO OT KIGN39A 7. Prenumbered forms should be used for purchase requisitions, purchase orders, and checks. The numbers of the documents issued should be verified periodically to make sure that all. forms can be accounted for.