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UNIT 2 PURCHASE AND PAYMENT CYCLE,

UNIT 2 PURCHASE AND PAYMENT CYCLE

Purchase cycle

Functions

Recording

Receiving

ordering

Control objec + example of internal control

Control objec - what you want to achieve

Internal control - how you are achieving objec

Weakness - internal controls not adhered to

Risk - What could happen if not adhere to internal control

Payment cycle

Functions

Payment to creditors

Control over cheques

Draw + sign of cheques

Record payment

EFT - Unit 1

Docs

Control Object + example of internal control

General controls

supervision + control

segregation of duties

rotation of duties

rotation of duties

regular leave

management control

internal audit

stationary control

scrutinise record + docs

test castings + calc

Requisition, list of approved suppl, Suppl price list, PO

validity - purchase journal supported by requisition, PO, GRN, DN, Invoice, creditor statement

Auth - PO prepared buyer + auth buy purch manager

Compl - stock at re-order level make requisition

Acc - invoices checked for math accuracy

recording - post from PJ to cr account then to general ledger

class - intergroup purch distinguished by code

cut-off - PJ update from invoice's date of delivery

Copy of PO, DN, GRN

Invoice, Copy of GRN, Copy PO, DN, PJ, CN

Remit advice, cheques, bank statements, cash payment journal

Validity - payment supported by requisition, creditor statement, recon, PO, GRN, DN, Invoice

auth - requisition to creditors auth by senior official

Compl - creditor contr recon with creditor ledge

Accu - Calc reviewed by independent

record - payments posted from advice to indiv cred account, to credit control

class - payment coded to creditor nr

cut-off - payment record as per date on advice