A&P audit
Requesting department
Requesting department is the department that requires the goods or services i.e. It can be any department in the company.
E.g. materials by production foreman, office equipment by accounting department, repairs by office personnel
The person requesting the goods or services will usually complete a purchase requisition for approval of authorise personnel.
Authorise personnel is usually the manager of the department. Manager of the requesting department checks that goods and services requested are necessary purchases and consistent with the best interest of the company i.e. not for personal use.
Refer to lecture note: Most companies have different levels of general authorisation depending on the type of purchases.
Weakness
Strength
Audit procedure
(To what, for what)
Objective
There are no proper procedures for authorisation.
Purchase requisition does not need to be approved by authorised personnel.
This may results to unauthorised and invalid company purchases i.e. for personal use and thereby, excessive or unnecessary items.
Hence, lead to overstatement of purchases.
There is evidence of proper procedures for authorisation.
Purchase requisition need to be approved by authorised personnel.
This ensures that all requests are valid (for the company’s purposes) and authorized.
Examine purchase requisition for;
Evidence of supervisory approval e.g. initial/signature.
Existence
Purchase requisitions forms are manually numbered.
The lack of adequate documents and records leads to lack of internal verification which may results in duplicate or missing orders or even orders for personal rather than company’s use.
This will lead to over/understated purchases.
There are adequate documents and record.
Purchase requisitions are pre-numbered and accounted for a regular basis/ purchase orders are pre-printed and pre-numbered.
This enables detection of duplicate or missing documents.
Account of numerical
Requesting department is the department that requires the goods or services i.e. It can be any department in the company.
E.g. materials by production foreman, office equipment by accounting department, repairs by office personnel
The person requesting the goods or services will usually complete a purchase requisition for approval of authorise personnel.
Authorise personnel is usually the manager of the department. Manager of the requesting department checks that goods and services requested are necessary purchases and consistent with the best interest of the company i.e. not for personal use.
Refer to lecture note: Most companies have different levels of general authorisation depending on the type of purchases.
Weakness
Strength
Audit procedure
(To what, for what)
Objective
There are no proper procedures for authorisation.
Purchase requisition does not need to be approved by authorised personnel.
This may results to unauthorised and invalid company purchases i.e. for personal use and thereby, excessive or unnecessary items.
Hence, lead to overstatement of purchases.
There is evidence of proper procedures for authorisation.
Purchase requisition need to be approved by authorised personnel.
This ensures that all requests are valid (for the company’s purposes) and authorized.
Examine purchase requisition for;
Evidence of supervisory approval e.g. initial/signature.
Existence
Purchase requisitions forms are manually numbered.
The lack of adequate documents and records leads to lack of internal verification which may results in duplicate or missing orders or even orders for personal rather than company’s use.
This will lead to over/understated purchases.
There are adequate documents and record.
Purchase requisitions are pre-numbered and accounted for a regular basis/ purchase orders are pre-printed and pre-numbered.
This enables detection of duplicate or missing documents.
Account of numerical