PURCHASES AND PURCHASE RETURN Control Objective Controls by Management Test of Controls Occurrence and existance Recorded purchases Authorisation procedures and policies in Inspect policies and procedures and inquire represent goods and place for ordering goods and services. about them. services received. Segregation of duties. Observe and evaluate segregation of duties Purchase orders raised for each purchase Examine a sample of purchase orders to ensure and authorised by appropriate senior they have been appropriately authorised. personnel. Review the delegated list of authority for purchases. Approved purchase order for each For a sample of orders, examine the goods receipt of goods received note (GRN) and match it to the order. Staff receiving goods check them to the Observe receipt of goods by staff to confirm purchase order whether the check is done Stores clerks sign for goods received. Inspect a sample to confirm whether stores staff undertake this check. Purchase orders and GRNs are matched Examine supporting documentation for a sample with the suppliers’ invoices of invoices Completeness All purchase transactions Purchase orders and GRNs are matched Examine supporting documentation for a sample that occurred have been with the suppliers’ invoices. of invoices recorded. Periodic accounting for prenumbered Review entity’s procedures for accounting for GRNs and purchase orders. prenumbered documents. Independent check of amount recorded Examine application controls. in the purchase journal Examine documentation for evidence of this check. Accuracy, classification and valuation Purchase transactions are Purchase orders and GRNs are matched Examine supporting documentation for a sample correctly recorded in the with the suppliers’ invoices of invoices accounting system. Mathematical accuracy of the supplier’s Recalculate the mathematical accuracy of a invoice is verified. sample of suppliers’ invoices. Amount posted to general ledger is Review reconciliations for evidence of this check. reconciled to the purchases ledger. Chart of accounts in place. Review purchases journal and general ledger for reasonableness. Rights & Obligations Recorded purchases Purchase orders and GRNs are matched Examine supporting documentation for a sample represent the liabilities of with the suppliers’ invoices. of invoices. the entity. Cut off Purchase transactions are All goods received reports forwarded to Compare dates on reports to dates on relevant recorded in the correct accounts payable department daily. vouchers. accounting period. Procedures in place that require Compare dates on vouchers with dates they recording of purchases as soon as were recorded in the purchases journal possible after goods/services received. INVENTORIES Control Objective Controls by Management Test of Controls
PURCHASES AND PURCHASE RETURN Control Objective Controls by Management Test of Controls Occurrence and existance Recorded purchases represent goods and services received. Authorisation procedures and policies in place for ordering goods and services. Inspect policies and procedures and inquire about them. Segregation of duties. Observe and evaluate segregation of duties Purchase orders raised for each purchase and authorised by appropriate senior personnel. Examine a sample of purchase orders to ensure they have been appropriately authorised. Review the delegated list of authority for purchases. Approved purchase order for each receipt of goods For a sample of orders, examine the goods received note (GRN) and match it to the order. Staff receiving goods check them to the purchase order Observe receipt of goods by staff to confirm whether the check is done Stores clerks sign for goods received. Inspect a sample to confirm whether stores staff undertake this check. Purchase orders and GRNs are matched with the suppliers’ invoices Examine supporting documentation for a sample of invoices Completeness All purchase transactions that occurred have been recorded. Purchase orders and GRNs are matched with the suppliers’ invoices. Examine supporting documentation for a sample of invoices Periodic accounting for prenumbered GRNs and purchase orders. Review entity’s procedures for accounting for prenumbered documents. Independent check of amount recorded in the purchase journal Examine application controls. Examine documentation for evidence of this check. Accuracy, classification and valuation Purchase transactions are correctly recorded in the accounting system. Purchase orders and GRNs are matched with the suppliers’ invoices Examine supporting documentation for a sample of invoices Mathematical accuracy of the supplier’s invoice is verified. Recalculate the mathematical accuracy of a sample of suppliers’ invoices. Amount posted to general ledger is reconciled to the purchases ledger. Review reconciliations for evidence of this check. Chart of accounts in place. Review purchases journal and general ledger for reasonableness. Rights & Obligations Recorded purchases represent the liabilities of the entity. Purchase orders and GRNs are matched with the suppliers’ invoices. Examine supporting documentation for a sample of invoices. Cut off Purchase transactions are recorded in the correct accounting period. All goods received reports forwarded to accounts payable department daily. Compare dates on reports to dates on relevant vouchers. Procedures in place that require recording of purchases as soon as possible after goods/services received. Compare dates on vouchers with dates they were recorded in the purchases journal INVENTORIES Control Objective Controls by Management Test of Controls
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