Results of Purchasing Cycle Operational Audit

Following the operational audits of the Purchasing function, 800 purchase orders were reviewed and the following weaknesses were found:

1. 51 orders were not signed by a purchasing officer.
2. 15 were not authorised by the correct purchasing officer for that product.
3. 12 purchases of goods or services were made with verbal requests from store managers and purchase orders were not raised for them.
4. 35 orders have been outstanding for more than three months.

1. 8 additional orders have been raised duplicating orders for goods included in those orders outstanding for more than three months.
   1. 5 orders were for goods for the personal use of staff but consequently and correctly charged to them.

(g) 2 order sets were missing.

In addition to the above, the organisation structure of the Purchasing function was reviewed and found to be ineffective in being able to comply with the basic tenets of internal control.

Required:

1. Describe the procedures used in the operational audit that may have discovered each of the above errors of procedure or control.
2. Write a report stating that recognises the current organisation structure of Book Worm and fully detail:

• The error found.
• The possible consequences of the error.
• A recommendation that will prevent or detect future instances of the error.
• A modified organisation chart with any additional details, job descriptions and
• duties that may be needed.