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Unit 2- Purchase and Payment cycle - Coggle Diagram
Unit 2- Purchase and Payment cycle
Purchase
cycle
Functions
Ordering
of goods
Documentation present:
Requisitions
List of approved suppliers
Suppliers price lists
Purchase orders(PO)
Receiving of goods
Documentation present:
Supplier note
Copy of the PO's
Copy of the GRN
-DN from supplier
purchase journal
Credit Notes ( Disputed
invoices and goods returned)
Recording of goods
Documentation present:
Copy of PO
Supplier delivery notes(DN)
Goods Received Note (GRN)
Payment
cycle
Functions
:
Recording of payments
Control over cheque forms
Drawing and signing of cheques
Documentation present:
Remittance advices
Cheques
Bank statements
Cash payments journal
Control objectives
• Occurrence/Validity
• Authorisation
• Completeness
• Accuracy
• Recording
• Classification
• Cut off
Substantive
testing
Consist of test of details of the
transactions, account balances
and disclosure, and substantive
analytical procedures occurred
It is important for Auditors to perform these tests are to identify any risks associated with it and to prevent any fraud from occurring as it can be easily identified from substantive testing
Weaknesses
Recommendation
Risk