Mustang Co (Mustang) manufactures automobiles. It has a December 31 year end. The company purchases its auto parts from a wide range of suppliers across North America.

When factory staff need auto parts, they complete a requisition form, often without checking inventory levels. The requisition is sent to the purchasing department. Sometimes the requisitions are approved by a manager, but sometimes they are sent without approval. Staff in the purchasing department combine orders and create sequentially numbered purchase orders based on the approved suppliers list, which was last updated 24 months ago.

When the goods are received, the warehouse staff compare the quantity to the suppliers shipping document. They also check the quality of the goods received. If the goods do not meet the quality standards, they are refused. If the goods are satisfactory, the warehousing staff complete a sequentially numbered receiving report and send a copy to the accounting department.

Purchase invoices are sent directly to the purchasing clerk, who keeps them in a file folder until the end of each week. She then inputs them into the purchasing ledger for payment. The invoices are reviewed and authorized for payment by the controller, and the actual payment is made 60 days after the invoice is input into the system.

Required:

In respect of the purchasing system of Mustang Co:

(i) Identify and explain FIVE deficiencies; and

(ii) Recommend a control to address each of these deficiencies.