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Unit 2 Summary: Purchases and Payments Cycle, GRM 22 Unit 2 Summary …
Unit 2 Summary:
Purchases and Payments Cycle
The 3 distinct functions:
Ordering of goods
PRs
List of approved suppliers
Supplier price list
POs
Receiving of goods
PO copy
DN
GRN
Recording of goods
Supplier invoice
PO copy
GRN copy
DN
Purchases journal
Credit notes
The Payment Cycle:
3 Functions
Control over cheque forms
Drawing and singing of cheques
Recording of payments
Documentation
Remittance advices
Cheques
Bank statements
Cash payment journal
9 general controls
Supervision and review
Segregation of duties
Rotation of duties
Personnel regularly leave
Management control
Internal audit
Stationary control
Records scrutinizing
Test calculations and casting
7 control objectives
Occurrence or validity
Authorization
Completeness
Accuracy
Recording
Classification
Cut off
Weaknesses and Risks
Weakness
Absence of control measure or poor implementation of a control method
Risk
What could go wrong as a result of a weakness
Example:
No stock re-order level in the factory.
Risk of running out of stock and failure to meet customer demands
GRM 22 Unit 2 Summary
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