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List the main control features one would expect to find in the following activities related to the buying function in an organization: (i) Buying of goods...

List the main control features one would expect to find in the following activities related to the buying function in an organization:
(i) Buying of goods
(ii) Receipt of goods
(iii) Payment of outstanding balances

Answers

Wilfred
i ) Buying of goods
– Only goods/items that are needed by the organization are ordered for clear indication of type and quantity of each item should be shown.
– All orders should be made out of the company‘s order forms and signed by the purchasing officer after verification from the manager of the requisitioning department.
– Purchasing of goods should be from authorized supplies, approved by the Board for the given period.
– There should be controls to ensure all purchase invoices have been received and correctly entered in the books.

ii) Receipt of goods
– Goods should be inspect on receipt without delay to ensure that they all are the goods which were ordered and that they are in good condition.
– Goods received note should be serially numbered and all numbers accounted for by person independent of the receipt and ordering.
– Invoices should be checked against Goods Received Note before payment.
– A listing and evaluation of unmatched goods received enables unrecorded liability for goods taken into stocks, but for which no invoices have been received to be ascertained.

iii) Payment of Outstanding balances
– There should be schedule indicating creditors against duration of dues before authorization for payments.
– Before payment, a responsible official in accounts department should approve the invoices. This person should be independent of those responsible for any purchasing function.
– Before approving invoices for payment, the official should see that invoices have properly been initiated to him and evidenced that checking is complete.
– Cheques written to respective creditors should have been authorized by all the signatories for transactions involving material sums of money
Wilfykil answered the question on February 22, 2019 at 08:30

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