Blog: ACC311 Assignment No. 2

Semester “Fall 2010”

“Auditing (ACC311)”

Assignment No. 02 Marks: 10

Question 1:

Your senior has asked you to carry out an internal control review of the purchasing department of a manufacturing company. What control procedures would you expect in the following functions of the department:

• Ordering of goods

• Receipt of goods

Solution:

Ordering of Goods:

• Need assessment

• Proper Request from concerned department which needs these goods

• Approval of the request from Requesting department head

• Inviting Quotations from vendors (usually from authorized vendors)

• Quotation with competitive rates & best quality product is selected

• Proper Purchase Order is prepared stating terms & conditions of purchase

• Approval of Purchase order from Purchasing Department head

Receipt of Goods:

• Gate Pass is prepared

• Quality of goods is checked as per PO

• Quantity of Goods is checked as per PO

• Goods are entered in Store

• Goods are entered in stock ledger

• Check the bill is as per goods received

• Forward the Bill to Accounts Payable