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