Chapter 13 - Chapter 13 - Auditing the Inventory Management...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 13 - Auditing the Inventory Management Process 13-1 CHAPTER 13 AUDITING THE INVENTORY MANAGEMENT PROCESS Answers to Multiple-Choice Questions 13-14 d 13-21 b 13-15 a 13-22 d 13-16 c 13-23 d 13-17 b 13-24 b 13-18 d 13-25 a 13-19 c 13-26 d 13-20 d Solutions to Problems 13-27 The identification and explanation of the systems and control weaknesses are as follows: The purchase requisition is not approved. A responsible person in the stores department should approve the purchase requisition. The approval should be indicated on the purchase requisition after the approver is satisfied that it was properly prepared based on a need to replace stores or the proper request from a user department. Purchase requisition number 2 is not required. Purchase requisitions are unnecessarily sent from the stores department to the receiving room. The receiving room does not make any use of the purchase requisitions, and no purpose seems to exist for the receiving room to obtain a copy. A copy of the requisition might be sent from the stores department directly to the accounts payable department, where it can be compared to the purchase order to verify that merchandise requisitioned by an authorized employee has been properly ordered. Purchase requisitions and purchase orders are not compared in the stores department. Although purchase orders are attached to purchase requisitions in the stores department, there is no indication that any comparison is made of the two documents. Prior to attaching the purchase order to the purchase requisition, the requisitioner's functions should include a check that (1) prices are reasonable, (2) the quality of the materials ordered is acceptable, (3) delivery dates are in accordance with company needs, and (4) all pertinent data on the purchase order and purchase requisition (e.g., quantities, specifications, delivery dates, etc.) are in agreement. Since the requisitioner will be charged for the materials ordered, the requisitioner is the logical person to perform these steps. Purchase orders and purchase requisitions should not be combined and filed with the unmatched purchase requisitions in the stores department. A separate file should be maintained for the combined and matched documents. The unmatched purchase requisitions file can serve as a control over merchandise requisitioned but not yet ordered.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 13 - Auditing the Inventory Management Process 13-2 Preliminary review should be made before preparing purchase orders. Prior to preparation of the purchase order, the purchase office should review the company's need for the specific materials requisitioned and approve the request. The purchase office should attempt to obtain the highest-quality merchandise at the lowest possible price, and the procedures that are followed to achieve this should be included on the flowchart. There is no indication that the purchase office submits purchase orders to competitive bidding when appropriate. That office should be
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 7

Chapter 13 - Chapter 13 - Auditing the Inventory Management...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online