Requirement:

A. main issue of the case study

B. Causes of the Issue

C. Formulate additional recommendations based on the audit findings of Case study.

Case Study:

GENERAL

In planning and performing our audit in accordance with Philippine Standards on Auditing, we considered the internal controls of the Office Management and Purchasing Department (the Department) as a basis for designing our auditing procedures for the purpose of testing the effectiveness of the Department's internal control. We are issuing this report in line with our responsibility to evaluate the adequacy and improve the efficiency and effectiveness of internal controls. We obtained an understanding of the policies and procedures of the Department. Our procedure includes examination and inspection of supporting documents. The result of our test of controls allows us to evaluate whether or not the controls identified over the flow of transactions are likely to be effective in preventing control deficiencies in the Department. Our comments and recommendations are offered as constructive suggestions in support of management's continuing desire to improve internal controls and other administrative practices and procedures and were limited only based on the provided supporting documents.

OBJECTIVES

The primary objective of this engagement is to help the Department achieve its objective by bringing in a systematic, disciplined approach to evaluate the adequacy and improve the efficiency and effectiveness of internal controls.

SCOPE OF ENGAGEMENT

This engagement covers the Office and Pantry Supplies as of June 24, 2021.

LIMITATIONS

The Audit Risk or risk that an incorrect audit result/opinion is issued will not be fully mitigated, even if the audit team exercise due diligence and professional skepticism all throughout the engagement, but can still be managed by applying the appropriate audit risk model. The audit risk is the product of Inherent Risk, Control Risk and Detection Risk. The audit risk is directly correlated also with the supporting documents and information's' completeness, accuracy and if provided timely by the process owners.

AUDIT PROCEDURES PERFORMED

We have performed the following audit procedures:

1. Obtained the monthly inventory prepared by the Department

2. All listed supplies were checked to verify the accuracy of recorded ending inventory balance at June 24, 2021.

3. Performed our inventory count observation.

4. Traced items to the actual inventory count listing.

5. Obtained the purchase orders of the delivered items for the Purchasing Department for the period of January 12 to June 24, 2021.

6. Obtained the supporting documents of issued items for the period of January 12 to June 24, 2021.

7. Performed an inventory roll forward based on the obtained to documents to validate the movements and ending inventory balance as of June 24, 2021.

AUDIT FINDINGS

i. Variance for Supplies Inventory Based on the audit procedures performed, the following variances for the supplies were noted.

A. Office Supplies

i.There is no recorded beginning inventory but there were issuances made for supplies. During the reconciliation, we noted from the inventory sheet for the month of April 2021 that there were issuances made for Battery AA energizer with the SPR No. 93 and 103 date issued was on April 5, 2021 and April 26, 2021 respectively.

OMPD Audit Reply - 7.7.21 (Mr. R.M)

As per checking the double A battery is a request of Logistic Department that should be forwarded to them. It was included in our stock because OMPD also has a pending order with the supplier (1618 office solution Inc.)

ii.The variance noted in the Copy Paper Short was due to the difference between the total requested item and the recorded quantity in the inventory sheet for the month of January 2021. Based on inventory sheet the recorded issuances were 28 reams instead of 30 reams.

OMPD Audit Reply - 7.7.21 (Mr. R.M) This is the result of no counter or double checking between Supplies Request Form and Inventory Summary Report. Moving forward custodian on a weekly basis will reconcile said documents.

iii.There was an overage in Expandable Envelop Long and shortage in Expandable Envelop Short. The variance was due to the difference between the item requested and issued. Based on the inventory sheet for the month of February 2021 total issuance recorded was six (6) pieces of Expandable Envelop Short but upon checking with the attached SRF No. 43 date issued February 10, 2021 the requested item was six (6) pieces of Expandable Envelop Long.

OMPD Audit Reply - 7.7.21 (Mr. R.M.) We will ensure that the actual issued items will be the same as per request noted on the Supplies Request Form

iv.As per SI No. 88310 date March 24, 2021, total delivery was two hundred fifty six (256) pieces instead of two hundred fifty (250) pieces recorded in inventory sheet for the month of March 2021.

OMPD Audit Reply - 7.7.21 (Mr. R.M.)

Weekly recon of documents (delivery invoice, supplies request form) as against summary report will be made.

B. Pantry Supplies

Beg. Total Supplies Per Record Particulars Inventory Purchases Available for Per LAD Issuances (Actual) 1/22/2021 Reconciliation 6/24/2021 Difference Issuance ALBATROSS Strawberry 1 23 24 24 1 (1) TOTAL 737 1,573 2,310 1,867 443 444 (1) As per inquiry with the designated staff, issuances made were overlooked and was not recorded on time.A. Office Supplies Beg. Total Supplies Per Record Per IAD Particulars Inventory Purchases Available for Issuances (Actual) Difference Reconciliation 1/22/2021 Issuance 6/24/2021 Battery AA Energizer (EO/OMP) 26 58 84 74 10 38 (28) Copy Paper $20 Short Advance HardCopy 131 208 339 259 80 82 (2) Expanded Envelope Long Red 15 24 15 9 15 (6) Expanded Envelope Short Red 21 5 26 6 20 14 6 White Plain Mail 527 509 1,036 1,030 6 6 Envelope Long TOTAL 2,222 3,331 5,553 3,953 1,600 1,624 tiva+ (24) Find Go to Settings to ac i. There is no recorded beginning inventory but there were issuances made for supplies. During the reconciliation, we noted from the inventory sheet for the month