During the audit of a non-public company, the auditors study of organizational lines of authority and their use of an internal control questionnaire disclosed that the receiving department personnel were under the direction of the purchasing agent. Accounts Payable Department employees had also been instructed to accept informal memoranda from the purchasing agent, as evidence of receipt of merchandise and propriety of invoices.

As auditor would you accept this arrangement as an adequate arrangement for internal control? If not, please describe a suitable system utilizing the business forms discussed in class.