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Purchases & Payments Cycles - Coggle Diagram
Purchases & Payments Cycles
Purchases Cycle
Ordering
Purchase Orders
List of Approved Suppliers
Receiving
Receipt of goods
Details of goods
The Goods Received Note
Treatment of damaged goods
Recording
Recording of purchases
Disputed Invoices
Invoices Received
Goods Returned
Control Objectives
Authorisation
All purchases are authorised according to company policy
Completeness
Two persons inspect goods on received for quantity and quality and prepare a GRN.
Validity
All entries in purchase journal should be supported
Accuracy
Purchase invoice is independently checked for mathematical accuracy
Recording
The purchase journal is updated from the purchase invoices.
Classification
Inter-group purchases (if there are any) are clearly distinguished by a code number and separately recorded
Cut-off
The Purchase journal updated from invoices in respect of the date of delivery
Payments Cycle
Payments to Creditors/Payables
Drawing and Signing of cheques
Recording of payments
Controls over cheque forms
EFT Payments
Control Objectives
Authorisation
Two signatories review and cancel supporting documentation, before approving payment.
Completeness
Payment advices are recorded numerically and missing numbers are followed up
Validity
All payments on creditors accounts are valid and are supported by proper documentation
Accuracy
All calculations are reviewed by an independent person.
Recording
Payments are posted from the payment advice to the individual creditors' account and the total to the creditors control account
Classification
Independent person reviews codes and date of payment.
Cut-off
All payments are recorded in correct period in respect of the date of the cheque.
Possible Weaknesses
Correct verification of goods on receipt
Documentation Accuracy
Correct departments to receive required docs
Substantive Procedures
Assertions - Purchases & Payments
Accuracy
Cut-off
Occurence
Classification
Completeness
Assertions - Trade & Payables
Accuracy, valuation & allocations
Completeness
Existence
Classification
Obligations
Presentation