You have been engaged by the management of Zazandra Sdn. Bhd, a medium-sized manufacturing company, to study
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Question:
You have been engaged by the management of Zazandra Sdn. Bhd, a medium-sized manufacturing company, to study and evaluate its internal control over the purchases and payments system. You have made the following observations concerning procedures used by Zazandra.
- Owing to difficulties in recruiting a Purchasing Manager, the company has undertaken to handle all purchasing requirements through individual requisitioning departments.
- Goods are received by the Receiving Department together with delivery slips attached. The department head acknowledges the receipt by signing the delivery slips.
- The delivery slips are sent to Storekeeper. The Storekeeper records the details in the inventory records.
- The authorized delivery slips are then forwarded to the Accounts Department where they are filed in date order.
- Upon receipt of vendor invoices, the invoices are forwarded to the Accounts Department where the prices and extensions are verified.
- Vendor invoices are forwarded to department heads who have requisitioned the goods, for their authorization and the resumed to the Accounts Department for payments.
Required:
- Briefly describe what techniques you would use to record this system.
- Why should a company have an independent Purchasing Department?
- What weaknesses can you identify from your review of the system and the internal control of Zazandra Sdn.Bhd?
- What errors are likely to result from the control weaknesses you have identified above?
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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