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Purchases and Payment Cycle. - Coggle Diagram
Purchases and Payment Cycle.
Ordering Function
Supplier price lists
Purchase orders
List of approved suppliers
Requisitions;
Purchase orders must be sequentially numbered and contain required information such as description of goods, quantity ordered etc.
Orders must be authorized by purchase manager
Receiving goods function
Goods received notes
Goods should inspected for type, quality and quantity against the purchase orders before DN is signed.
Supplier delivery notes
Goods received note should include details such as quantity of goods received, purchase order number etc.
Copy of Purchase Order.
GRN should be issued in duplicate format
Recording function
Copy of the GRN
DN from supplier
Copy of the PO’s
Purchases Journal
Supplier invoice
Credit Notes(Disputed invoices and goods returned)
Persons recording invoice should check the invoice against
:quality, type, quantity and date to the GRN and DN
Payment Cycle
Cash payments journal
Bank statements
Cheques drawn must be authorised and have supporting documentation
Segregation of duties is a necessity when drawing, issuing and handling cheques
Cheques
Remittance advices
Controls and Control Objectives Purchases
Accuracy: All orders are carried out accurately. All purchase transactions are accurately recorded at the correct quantity, at the correct amount and are arithmetically correct
Completeness: All valid purchase transactions are recorded and nothing is left out
Recording: All purchase transactions are correctly recorded
All purchases are authorised according to company policy.
Classification: All purchase transactions are correctly classified according to the
nature thereof
Occurrence/Validity: All recorded purchases are valid and supported by proper
documentation.
Cut Off: All purchase transactions are recorded in the correct reporting period
Controls and Control Objectives for Creditors:
Accuracy: Payments are made at the correct amount and is arithmetically correct
Recording: All payment transactions are correctly recorded
Completeness: All valid payment transactions are recorded and nothing is left out
Classification: All payments classified to the correct creditor's account
Authorisation: All payments are authorised according to company policy
Cut off: All payments recorded at date of payment per payment advice and date of
cheque
Occurrence/Validity: All payments on creditors accounts are valid and are supported
by proper documentation