Expenditure Cycle Controls

Presented below are descriptions of eight controls in the expenditure cycle followed by descriptions of eight risks that the controls are designed to mitigate. Match the controls with the risk that they are designed to reduce.

1. An assistant purchasing agent is required to review the open purchase order file weekly to identify long-outstanding purchasing requests and resolve their status.

2. Each Friday the accounts payable clerk runs the program to print the checks to vendors to settle open invoices due and forwards the checks with the voucher package to the treasury department for review and signing.

3. The accounts payable department matches and compares and agrees copies of the purchase order and the receiving report with the vendor invoices.

4. The receiving department is required to physically count the goods received and inspect the goods for damage or other deficiencies.

5. The treasury department cancels the voucher packages as paid once the checks are signed.

6. The purchasing agent must approve all purchase orders before they are sent to vendors and suppliers.

7. The purchasing department reviews all purchase requisitions to determine that they are submitted by authorized personnel and are within budgetary limits.

8. The head purchasing agent meets with the purchasing department staff on an annual basis to review the performance of suppliers on factors such as lead times required, responsiveness to requests, quality if products, and competitiveness of prices.

Match each of the options above to the items below:

#? The risk of losses because the company pays for a quantity of goods not received or invoiced at incorrect prices

#? The risk of losses from unauthorized purchases of goods from unapproved vendors or at higher than normal or allowed prices

#? The risk of losses from unauthorized request for goods or goods requested beyond budgetary authorizations

#? The risk of losses because the entity accepts poor quality goods or an incorrect quantity of goods

#? The risk that the company will suffer losses due to inefficiencies or a lack of materials and supplies because purchase requests are not completed in a timely manner

#? The risk of losses because a vendor invoice is accidentally or intentionally resubmitted for payment more than one time

#? The risk that the company will suffer losses due to poor performance by its supply chain partners

#? The risk of loss because an employee produces an unauthorized check payable to themselves