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PURCHASE & PAYMENT CYCLE - Coggle Diagram

- - - - Documentation required:
        
        Remittance advie
        
        Cheques;
        
        Bank Statements;
        
        Cash payments journal
        
        Control Objectives:
        
        Occurrence/Validity;
        
        Authorization;
        
        Completeness;
        
        Accuracy;
        
        Recording;
        
        Classification;
        
        Cut off
        
        Controls over cheque forms:
        
        Cancelled cheques should be clearly marked as cancelled;
        
        cheques should be sequentially numbered;
        
        Cheques should by filed in numerical order;
        
        Cash cheques should be discouraged;
        
        Cheques must be crossed with the words "not transferable"
        
        Drawing and signing of cheques:
        
        should be presented to persons authorized to sign &
        supported with the necessary supporting documentation;
        
        Documentation must be inspected & marked as paid if accurate to revent double payment;
        
        Cheques should be signed by two signatories with the necessary level of authority
        
        Recording of payments:
        
        Must be done by persons who are independent of those who draw, sign or handle the cheques to ensure segregation of duties;
        
        Cheques returned from bank must not be available to the person who keeps accounts payable records;
        
        The control account must not be accessible to the individuals responsible for maintenance of the accounts payable sub ledger;
        
        Regular reconciliations are to be done by a person independent from those maintaining the sub ledger; and
        
        Individual creditor’s reconciliations must be produced on a monthly basis of all creditor balances.
- - - - Documentation required:
        
        Requisitions;
        
        List of approved suppliers;
        
        Supplier price list;
        
        Purchase Orders (PO)
        
        Control Objectives:
        
        Occurrence/Validity;
        
        Authorisation;
        
        Completeness;
        
        Accuracy;
        
        Recording;
        
        Classifications; and
        
        Cut off
        
        PO should include the following and be sequentially numbered:
        
        The name of the supplier;
        
        The quantity ordered;
        
        A description of the goods;
        
        The price of the good;
        
        Discounts;
        
        Terms of payment;
        
        Delivery address; and
        
        Signature of the the buyer/purchase department
        
        PO's authorised by purchasing manager
        
        PO's must be in triplicate & copies sent to The Suppliers, Receiving Department and a copy kept in deliveries pending register
      - Separate purchasing department or buyer must be employed
      - Purchasing policy to govern re-ordering levels
      - Purchase requisition issued when re-order levels reached
      - List of approved suppliers must exist
      - Authorization from a senior within the department where suppliers other than those authorized are used
      - Change to supplier must be authorised by senior within department
  - - - Documentation required:
        
        Copy of the PO;
        
        Supplier delivery notes (DN); and
        
        Goods received notes (GRN)
        
        GRN should include the following:
        
        The quantity of goods received
        
        The purchase order number
        
        The date on which goods was received
        
        A description of the goods
        
        Details of the person who received the goods
        
        GRN should be issued in duplicate and sent to the following department:
        
        Ordering department; and
        
        Together with the copy of the PO and DN to the accounts department
      - Details of goods received should be captured on a GRN
      - The GRN should be signed off by the individual responsible for receiving
      - Staff responsible should inspect goods for type, quality and quantity against PO's
      - Damaged goods are not to be accepted and must be returned to supplier and the accounts and purchasing departments must be notified accordingly
      - Control Objectives:
        
        Occurrence/Validity;
        
        Authorization;
        
        Completeness;
        
        Accuracy;
        
        Recording;
        
        Classification; and
        
        Cut off
  - - - Documentation required:
        
        Supplier Invoice;
        
        Copy of the PO's;
        
        Copy of the GRM;
        
        DN from supplier;
        
        Purchase Journal; and
        
        Credit Notes (Disputed invoices and goods returned)
        
        Control Objectives:
        
        Occurrence/Validity;
        
        Authorization;
        
        Completeness;
        
        Accuracy;
        
        Recording;
        
        Classification;
        
        Cut off
        
        Invoices received should not be entered into the records if not approved as correct by person/s whose duty it is to check the accuracy
        
        The following should be checked:
        1.Quality, type, quantity and date to the GRN and DN; 2.The price, terms and account details to the agreed PO;
        
        The calculations of the invoice
      - Disputed invoices are to be kept separately and followed up by a senior member of
        staff
      - All goods returned must be sent back to the supplier and a credit note (CN) is to be made out to the supplier.
      - The purchases should be entered directly in purchase journal and filed under the suppliers’ name and checked to the statement received from the supplier