PURCHASE AND PAYMENTS CYCLE
FUNCTIONS
DOCUMENTS
CONTROL OBJECTIVES
INTERNAL CONTROLS
TEST OF CONTROLS
SUBSTANTIVE PROCEDURES
WEAKNESSES/RISKS
Purchase Requisition
Purchase Order
GRN
Invoice verification
Payment processing
Need for purchase
details of requisition
supplier name
item details
Quantity
Price
Ts and Cs
Verifies match to PO
Invoice matches PO and GRN
Accuracy
pricing
quantity
other relevant info
verification to PO, GRn and DN
Creditors/ Accounts Payable
Financial Reporting
Validity
Authorisatioon
Completeness
Accuracy
Recording
Classification
Cut off
Purchase Orders (POs)
Purchase requisitions
Supplier Invoice
Delivery Note (GN)
Goods Receive Note (GRN)
Payment Authorization
Segregation of duties
Order requisitions
POS
Vendor selection and approval
GRNs
2 person checks and authorisations
PO approvals
Vendor selection verification
Receiving and Inspection of goods
Payment processing
Sample testing
Errors in recording
Fraudulent activity
Lack of proper internal controls
Inefficient processes
Inaccurate Financial Statements
Reviewing POs
Examining vendor invoices
Checking GRNs
Inspecting payments
Verifying and cross-checking vendor statements
analysing accounts payable statements
testing for duplicate statements
Verifying and examining Bank recon
Performing test controls