Check listpolicy to be implemented for having controls for purchasi.pdf

Check listpolicy to be implemented for having controls for purchasi.pdf

• 1.
  Check list/policy tobe implemented for having controls for purchasing of Raw materials & Equipment Sl no Key Control Activity Model Audit review Plan ( may be modified suitably to achieve the control objectives) Purchasing 1 Purchase orders are placed only after obtaining the requisite number of quotes, vetted and approved as per purchase policy and authority matrix. To review whether a system of obtaining competitive quotes from eligible vendors, review of supplier’s quotes by purchase committee and the decisions/minutes are properly recorded. Purchase orders terms and conditions are as per standard company terms. 2 Purchase orders are placed only for approved. Requisitions by designated authorities as per Approval matrix. To review whether the Management approves all purchase orders, with higher level management authority required for unusual purchases (such as capital outlays or standing orders) and all purchases that exceed established limits. Board approval is also required for specified types of purchases and this approval is appropriately documented. • To understand whether the management reviews reports detailing overrides of established purchase order prices, terms, and conditions 3 Purchase orders are entered accurately. • For, samples selected, purchase order entry data is compared to source documents by individuals who are independent of the purchase order entry process. • To review and test whether purchase order data is edited and validated; identified errors are corrected promptly 4 All amounts for goods received are input and processed to accounts payable. Accounts payable amounts are accurately calculated and recorded. • Test check whether goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are cancelled once matched or on payment of the invoice to prevent reuse. • Test whether the invoices not matched to goods receipt notes (or other appropriate supporting
• 2.
  documentation for servicesreceived) are investigated; payments on unmatched invoices require specific Management approval. • To trace the Invoices for services received to the appropriate authorization and accompanied by appropriate supporting Documentation. • To test Invoices, credit notes, and other adjustments related to accounts payable are backed by valid documents and management approvals. • Review the statements received from suppliers, on a sample basis and to test whether such statements are 5reconciled to the supplier accounts in the accounts p6ayable sub-ledger regularly and differences are Investigated. 8 Disbursements are only made for goods and services received and that too after the taking into consideration relevant credit period. To test check whether the management reviews supporting documentation before approving payments. To also test check whether individuals who make electronic funds transfers are authorized to do so by management.. • Management reviews a listing of supplier payments prior to release. • Disbursements at, before, or after the end of an accounting period are scrutinized to ensure complete and consistent recording in the appropriate accounting period. 9 Supplier master file maintenance and controls surrounding the master file Requests to change the supplier master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. • Supplier master file data is periodically reviewed by management for accuracy and on-going pertinence. Fixed Assets Policy of the Company pertaining to capital expenditures including budgeting etc. Ensure that all the asset additions are purchased and assets are requisitioned by authorized personnel • Verify to ensure that the modification to assets in sub-ledger can be by authorized users alone Additions made by the Company represent valid assets. Ensure that the fixed asset purchases are made only against purchase orders after obtaining
• 3.
  comparative quotes frommore than one supplier and validating the same quotes objectively. • Ensure the 3 way match between Invoice entered in the accounting department, matched with the purchase order and respective CIP account by performing a Test of Controls (TOC) for a selected samples Depreciation expense is calculated and recorded based on the a management’s estimated useful lives of the assets Based on the rates of depreciation and the Company’s decision of the life of the asset, verify the depreciation by re-calculating the depreciation or by performing a logic check All assets sold/scrapped are captured and documented appropriately Verify the policy of the Company with respect to the asset retirements. Check if there are appropriate controls in terms of the approvals for the disposal of the assets. • Verify the sale process by verifying the sale approvals, the computation of gain / loss on sale of the assets Sl no Key Control Activity Model Audit review Plan ( may be modified suitably to achieve the control objectives) Purchasing 1 Purchase orders are placed only after obtaining the requisite number of quotes, vetted and approved as per purchase policy and authority matrix. To review whether a system of obtaining competitive quotes from eligible vendors, review of supplier’s quotes by purchase committee and the decisions/minutes are properly recorded. Purchase orders terms and conditions are as per standard company terms. 2 Purchase orders are placed only for approved. Requisitions by designated authorities as per Approval matrix. To review whether the Management approves all purchase orders, with higher level management authority required for unusual purchases (such as capital outlays or standing orders) and all purchases that exceed established limits. Board approval is also required for specified types of purchases and this approval is appropriately documented. • To understand whether the management reviews reports detailing overrides of established purchase order prices, terms, and conditions 3 Purchase orders are entered accurately.
• 4.
  • For, samplesselected, purchase order entry data is compared to source documents by individuals who are independent of the purchase order entry process. • To review and test whether purchase order data is edited and validated; identified errors are corrected promptly 4 All amounts for goods received are input and processed to accounts payable. Accounts payable amounts are accurately calculated and recorded. • Test check whether goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are cancelled once matched or on payment of the invoice to prevent reuse. • Test whether the invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific Management approval. • To trace the Invoices for services received to the appropriate authorization and accompanied by appropriate supporting Documentation. • To test Invoices, credit notes, and other adjustments related to accounts payable are backed by valid documents and management approvals. • Review the statements received from suppliers, on a sample basis and to test whether such statements are 5reconciled to the supplier accounts in the accounts p6ayable sub-ledger regularly and differences are Investigated. 8 Disbursements are only made for goods and services received and that too after the taking into consideration relevant credit period. To test check whether the management reviews supporting documentation before approving payments. To also test check whether individuals who make electronic funds transfers are authorized to do so by management.. • Management reviews a listing of supplier payments prior to release. • Disbursements at, before, or after the end of an accounting period are scrutinized to ensure complete and consistent recording in the appropriate accounting period. 9 Supplier master file maintenance and controls surrounding the master file
• 5.
  Requests to changethe supplier master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. • Supplier master file data is periodically reviewed by management for accuracy and on-going pertinence. Solution Check list/policy to be implemented for having controls for purchasing of Raw materials & Equipment Sl no Key Control Activity Model Audit review Plan ( may be modified suitably to achieve the control objectives) Purchasing 1 Purchase orders are placed only after obtaining the requisite number of quotes, vetted and approved as per purchase policy and authority matrix. To review whether a system of obtaining competitive quotes from eligible vendors, review of supplier’s quotes by purchase committee and the decisions/minutes are properly recorded. Purchase orders terms and conditions are as per standard company terms. 2 Purchase orders are placed only for approved. Requisitions by designated authorities as per Approval matrix. To review whether the Management approves all purchase orders, with higher level management authority required for unusual purchases (such as capital outlays or standing orders) and all purchases that exceed established limits. Board approval is also required for specified types of purchases and this approval is appropriately documented. • To understand whether the management reviews reports detailing overrides of established purchase order prices, terms, and conditions 3 Purchase orders are entered accurately. • For, samples selected, purchase order entry data is compared to source documents by individuals who are independent of the purchase order entry process. • To review and test whether purchase order data is edited and validated; identified errors are corrected promptly 4 All amounts for goods received are input and processed to accounts payable.
• 6.
  Accounts payable amountsare accurately calculated and recorded. • Test check whether goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are cancelled once matched or on payment of the invoice to prevent reuse. • Test whether the invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific Management approval. • To trace the Invoices for services received to the appropriate authorization and accompanied by appropriate supporting Documentation. • To test Invoices, credit notes, and other adjustments related to accounts payable are backed by valid documents and management approvals. • Review the statements received from suppliers, on a sample basis and to test whether such statements are 5reconciled to the supplier accounts in the accounts p6ayable sub-ledger regularly and differences are Investigated. 8 Disbursements are only made for goods and services received and that too after the taking into consideration relevant credit period. To test check whether the management reviews supporting documentation before approving payments. To also test check whether individuals who make electronic funds transfers are authorized to do so by management.. • Management reviews a listing of supplier payments prior to release. • Disbursements at, before, or after the end of an accounting period are scrutinized to ensure complete and consistent recording in the appropriate accounting period. 9 Supplier master file maintenance and controls surrounding the master file Requests to change the supplier master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. • Supplier master file data is periodically reviewed by management for accuracy and on-going pertinence. Fixed Assets Policy of the Company pertaining to capital expenditures including budgeting etc.
• 7.
  Ensure that allthe asset additions are purchased and assets are requisitioned by authorized personnel • Verify to ensure that the modification to assets in sub-ledger can be by authorized users alone Additions made by the Company represent valid assets. Ensure that the fixed asset purchases are made only against purchase orders after obtaining comparative quotes from more than one supplier and validating the same quotes objectively. • Ensure the 3 way match between Invoice entered in the accounting department, matched with the purchase order and respective CIP account by performing a Test of Controls (TOC) for a selected samples Depreciation expense is calculated and recorded based on the a management’s estimated useful lives of the assets Based on the rates of depreciation and the Company’s decision of the life of the asset, verify the depreciation by re-calculating the depreciation or by performing a logic check All assets sold/scrapped are captured and documented appropriately Verify the policy of the Company with respect to the asset retirements. Check if there are appropriate controls in terms of the approvals for the disposal of the assets. • Verify the sale process by verifying the sale approvals, the computation of gain / loss on sale of the assets Sl no Key Control Activity Model Audit review Plan ( may be modified suitably to achieve the control objectives) Purchasing 1 Purchase orders are placed only after obtaining the requisite number of quotes, vetted and approved as per purchase policy and authority matrix. To review whether a system of obtaining competitive quotes from eligible vendors, review of supplier’s quotes by purchase committee and the decisions/minutes are properly recorded. Purchase orders terms and conditions are as per standard company terms. 2 Purchase orders are placed only for approved. Requisitions by designated authorities as per Approval matrix. To review whether the Management approves all purchase orders, with higher level management authority required for unusual purchases (such as capital outlays or standing
• 8.
  orders) and allpurchases that exceed established limits. Board approval is also required for specified types of purchases and this approval is appropriately documented. • To understand whether the management reviews reports detailing overrides of established purchase order prices, terms, and conditions 3 Purchase orders are entered accurately. • For, samples selected, purchase order entry data is compared to source documents by individuals who are independent of the purchase order entry process. • To review and test whether purchase order data is edited and validated; identified errors are corrected promptly 4 All amounts for goods received are input and processed to accounts payable. Accounts payable amounts are accurately calculated and recorded. • Test check whether goods received are matched on-line or manually with purchase order details and/or invoices; long outstanding goods receipt notes, purchase orders, and/or invoices are investigated timely and accrued as appropriate; documents are cancelled once matched or on payment of the invoice to prevent reuse. • Test whether the invoices not matched to goods receipt notes (or other appropriate supporting documentation for services received) are investigated; payments on unmatched invoices require specific Management approval. • To trace the Invoices for services received to the appropriate authorization and accompanied by appropriate supporting Documentation. • To test Invoices, credit notes, and other adjustments related to accounts payable are backed by valid documents and management approvals. • Review the statements received from suppliers, on a sample basis and to test whether such statements are 5reconciled to the supplier accounts in the accounts p6ayable sub-ledger regularly and differences are Investigated. 8 Disbursements are only made for goods and services received and that too after the taking into consideration relevant credit period. To test check whether the management reviews supporting documentation before approving payments. To also test check whether individuals who make electronic funds transfers are authorized to do
• 9.
  so by management.. •Management reviews a listing of supplier payments prior to release. • Disbursements at, before, or after the end of an accounting period are scrutinized to ensure complete and consistent recording in the appropriate accounting period. 9 Supplier master file maintenance and controls surrounding the master file Requests to change the supplier master file data are logged; the log is reviewed to ensure that all requested changes are processed timely. • Supplier master file data is periodically reviewed by management for accuracy and on-going pertinence.