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Unit 2 Summary - Coggle Diagram
Unit 2 Summary
THE ACTIVITIES AND CONTROLS THAT NEED TO BE IN PLACE FOR THE ORDERING OF
GOODS FUNCTION
List of approved suppliers
a. A list of approved suppliers must exist from which the buyer may acquire goods and
under no circumstance must there be deviated from this approved list;
b. Authorisation from a senior within the department is to be obtained where suppliers
other than those authorised are used;
c. All changes to the list of authorised suppliers are to be authorised by a senior in the
department;
Purchase orders
a. Sequentially numbered PO’s are to be completed;
b. PO’s should include the following information:
i. The name of the supplier;
ii. The quantity ordered;
iii. A description of the goods;
iv. The price of the good;
v. Discounts;
vi. Terms of payment;
vii. Delivery address; and
viii. Signature of the by the buyer/purchase department
c. Before the order is sent to the supplier, it must first be authorised by the purchase
manager.
d. The purchase order must then be issued in triplicate with copies for each of the
following:
i. The supplier;
ii. The receiving department; and
iii. A copy must also be kept in a deliveries pending register to be matched with
the delivery note.
THE ACTIVITIES AND CONTROLS THAT NEED TO BE IN PLACE FOR THE RECEVING OF
GOODS FUNCTION
Receipt of goods:
a. On receipt of the goods, staff responsible for the receiving of goods should inspect
the goods for type, quality and quantity against the purchase orders before the
delivery note is signed.
Details of goods received;
a. Details of goods received should be captured on a GRN;
b. The GRN should be signed off by the individual responsible for receiving.
The Goods received note:
a. The GRN should include the following detail:
i. The quantity of goods received
ii. The purchase order number
iii. The date on which goods was received
iv. A description of the goods
v. Details of the person who received the goods.
b. The GRN should be issued in duplicate format with copies sent to the following:
i. Ordering department; and
ii. Together with the copy of the PO and DN to the accounts department.
Treatment of damaged goods:
a. Damaged goods are not to be accepted;
b. Must be returned to the supplier; and
The accounts and purchasing departments must be notified accordingly
THE ACTIVITES AND CONTROLS THAT NEED TO BE IN PLACE FOR THE RECORDING
OF GOODS FUNCTION
Invoices Received:
a. Invoices received should not be entered into the records if it has not been approved
as correct by a person/s whose duty it is to check the accuracy of the supplier’s
invoices.
b. The person/s should check the following:
i. Quality, type, quantity and date to the GRN and DN
ii. The price, terms and account details to the agreed PO
iii. The calculations on the invoice/s
Recording of purchases:
a. The purchases should be entered directly in purchase journal and filed under the
suppliers’ name and checked to the statement received from the supplier.
Disputed Invoices:
a. Disputed invoices are to be kept separately and followed up by a senior member of
staff
Goods returned:
a. All goods returned must be sent back to the supplier and a credit note is to be made
out to the supplier.
THE ACTIVITES AND CONTROLS THAT NEED TO BE IN PLACE FOR THE PAYMENTS TO
CREDITORS/PAYABLES FUNCTION
Controls over cheque forms:
a. Cancelled cheques should be clearly marked as ‘cancelled’ and attached to the
relevant cheque counterfoil, or separately filed;
b. All cheques should be sequentially numbered;
c. All paid cheques should be filed in a numerical order;
d. Cash cheques should be discouraged; and
e. All cheques must be crossed with the words ‘not transferable’
Drawing and signing of cheques:
a. Cheques drawn should be presented to persons authorised to sign and must be
supported with the necessary supporting documentation;
b. Documents to be paid must be inspected and if agreed that the expenditure was
valid and accurate, the documents are to be marked as paid in order to prevent resubmission for payment; and
c. Cheques should be signed by two signatories with the necessary level of authority
to sign the cheques.
Recording of payments:
a. Recording of cheques must be done by persons who are independent of those who
draw, sign or handle the cheques to ensure segregation of duties;
b. Cheques returned from bank must not be available to the person who keeps
accounts payable records;
c. The control account must not be accessible to the individuals responsible for
maintenance of the accounts payable sub ledger;
d. Regular reconciliations are to be done by a person independent from those
maintaining the sub ledger; and
e. Individual creditor’s reconciliations must be produced on a monthly basis of all
creditor balances.