Review his list and for each internal control strength indicate whether you “Agree” or “Disagree” that each represents a strength. For those in which you disagree briefly explain why. Purchasing The department head of the requisitioning department selects the appropriate supplier. Proper authorization of requisitions by department head is required before purchase orders are prepared. Purchasing department makes certain that low-cost supplier is always chosen. Purchasing department assures that requisitions are within budget limits before purchase orders are prepared. The adequacy of each vendor’s past record as a supplier is verified. Receiving Secure facilities limit access to the goods during the receiving activity. Receiving department compares its count of the quantity of goods received with that listed on its copy of the purchase order. A receiving report is required for all purchases, including purchases of services. The requisitioning department head independently verifies the quantity and quality of the goods received Requisitions, purchase orders, and receiving reports are matched with vendor invoices as to quantity and price. Accounts Payable Accounts payable department recomputes the mathematical accuracy of each invoice. The voucher register is independently reconciled to the control accounts monthly by the originators of the related vouchers. All supporting documentation is marked “paid” by accounts payable immediately prior to making it available to the treasurer. All supporting documentation is required for payment and is made available to the treasurer. The purchasing, receiving, and accounts payable functions are segregated.

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 31P: The actions listed next are associated with either an activity-based operational control system or a...

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Question

Review his list and for each internal control strength indicate whether you “Agree” or “Disagree” that

each represents a strength. For those in which you disagree briefly explain why.

Purchasing

The department head of the requisitioning department selects the appropriate supplier.
Proper authorization of requisitions by department head is required before purchase orders are prepared.
Purchasing department makes certain that low-cost supplier is always chosen.
Purchasing department assures that requisitions are within budget limits before purchase orders are prepared.
The adequacy of each vendor’s past record as a supplier is verified.

Receiving

Secure facilities limit access to the goods during the receiving activity.
Receiving department compares its count of the quantity of goods received with that listed on its copy of the purchase order.
A receiving report is required for all purchases, including purchases of services.
The requisitioning department head independently verifies the quantity and quality of the goods received
Requisitions, purchase orders, and receiving reports are matched with vendor invoices as to quantity and price.

Accounts Payable

Accounts payable department recomputes the mathematical accuracy of each invoice.
The voucher register is independently reconciled to the control accounts monthly by the originators of the related vouchers.
All supporting documentation is marked “paid” by accounts payable immediately prior to making it available to the treasurer.
All supporting documentation is required for payment and is made available to the treasurer.
The purchasing, receiving, and accounts payable functions are segregated.

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