Management has requested a review of internal control over cash disbursements for parts and supplies purchased at manufacturing

plants. Cash disbursements are centrally processed at corporate headquarters based on disbursement vouchers prepared and

approved at manufacturing plants. Each manufacturing plant purchases parts and supplies for its own production needs.

In response to management's request, a thorough evaluation of internal control over disbursements for manufacturing plant

purchases of parts and supplies is being planned. As a preliminary step in planning the engagement, each plant manager has been

requested to provide a written description of his or her plant's procedures for processing disbursement vouchers for parts and

supplies. Presented below are some excerpts from one of the written descriptions.

For each of the disbursement system procedures listed below, state whether the procedure is consistent with good internal control.

The purchasing department acts on purchase requisitions issued by the parts department.

Software generates prenumbered purchase orders based on information submitted by buyers in

purchasing.

Receiving has complete access to purchase order information in the IT system.

When goods are received, the receiving department logs the shipment in the IT system by

indicating that the purchase order was received and forwards this electronically to accounts

payable.

When the vendor invoice is received, it is entered into the IT system and matched electronically

with purchase order and receiving information. Discrepancies are printed on an exception report

for follow$-$up by accounts payable personnel.

The software checks the clerical accuracy of information on vendor invoices. Discrepancies are

printed on an exception report for follow$-$up by accounts payable personnel.

A prenumbered disbursement is prepared and forwarded along with supporting documentation to

the plant controller, who reviews and approves the voucher.

$8$ Supporting documents are returned to accounts payable for fling, and approved disbursement

vouchers are forwarded to corporate headquarters for payment.

A report listing checks issued by corporate headquarters is received and promptly filed by accounts

payable.