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Unit 2: Purchase and Payment Cycle, Unit 2 Summary 221141192 - Coggle…
Unit 2: Purchase and Payment Cycle
The purchase cycle
Functions:
Ordering of goods
Requisition
List of approved suppliers
Suppliers price list
POs
Receiving of goods
Copy of PO
DN
GRN
Recording of goods
Supplier invoice
Copy of POs
Copyof GRN
DN from supplier
The payment cycle
Documentation
Remittance advices
Cheques
Bank statements
Cash payment journals
Functions
Control over cheques forms
Drawing and signing of cheques
Recording of payments
Test controls
Substantive testing
Audit procedure that examines financial statements and supporting documents to see if they contain errors
Internal controls
Occurrence or validity
Authorization
Completeness
Accuracy
Recording
Classification
Cut off
Weaknesses
E.g. Not having inventory re-order levels in place
Risk of ordering inventory late and hence losing customers orders.
Unit 2 Summary
221141192