2.4 The operational audit of the purchasing cycle has already been conducted. The Book Worm's organisational chart for the purchasing department is: BOOKWORM Extract: Purchasing Department Organisation Chart MANAGING DIRECTOR LINDA TRINH SUPPLY MANAGER WARREN PAGE PURCHASING OFFICER PURCHASING OFFICER MARK SHRESTHA STEFAN CHAPTER ADMINISTRATIVE VISOR CHRIS LEE ADMINISTRATIVE SUPPORT CLERK ADMINISTERIVE FREDA NOVEL TOM FICTION The internal control procedures within the Purchasing Department require: . All Purchase Requisitions must be approved by the operating manager whose department is allocated the cost of the items purchased. An approved Purchase Requisition must support all Purchase Orders. All Purchase Orders must authorised by the Purchasing Officer. The ledger accounts charged in the Purchase Order must checked for accuracy by an authorised member of the accounting department. Purchase Orders must be raised for all purchases of inventory items, administration and other expenses A regular report must be prepared showing unaccounted or missing Purchase Orders. All Purchase Orders outstanding for more than two months must be investigated.I The senior auditor has provided you with the Purchasing Department Operational Audit Plan, which includes the audit procedures. This is available in the Assessment Resources folder. During the operational audit of the Purchasing department, 800 purchase orders were reviewed and the following weaknesses were found: o 51 orders were not signed by a purchasing officer. = 15 were not authorised by the correct purchasing officer for that product. o 12 purchases of goods or services were made with verbal requests from store managers and purchase orders were not raised for them. 35 orders have been outstanding for more than three months. o 3 additional orders have been raised duplicating orders for goods included in those orders outstanding for more than three months. 5 orders were for goods for the personal use of staff. Once this was discovered the staff were made to repay Book Worm for the purchases. In addition to the above, the organisation structure of the Purchasing department was reviewed and found to be ineffective in being able to comply with the basic principles of internal control. a. Describe two (2) procedures used in the operational audit that may have discovered each of the above errors of procedure or control. Please review. Please expand on 'Evaluation of Please review 'Appraisal of plans', how would this procedure detect the errors listed? Evaluation of performance: the operational auditor cannot be expected to possess technical background in so many diverse processes going on in an organisation. In such case he must be dependent on acceptable standards, input output ratio and other benchmarks provided by management. carried on