Internal Controls
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Design a proposal for the appropriate controls to cover the following areas:
o Purchasing (THIS ONE)
o Cash Disbursements (THIS ONE)
You need to tell me what internal controls that you would propose over these different processes
Some of these might be physical controls
some might have to do with approvals
some might have to do with reconciliation
some of these might have to do with segregation of duties
What are the controls that you would propose for cash
- counting the money in the drawer before and after the shift...maybe someone signs off on it
- reconciling the bank account on a monthly basis...maybe its approved by someone
- who signs checks when you have to buy stuff....do two people have to sign if it is over a certain amount...if so...what is the amount?
- who approves people taking money out of petty cash
Be specific as to who will do it
how often it will be done
who will approve it
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Purchasing:
Some of these might be physical controls:
The physical control is that the purchase officer is located at the company office, the production manager or the other departments that make purchase requisitions are located at the company workshop. Similarly, the inventory officer that receives the physical purchases and makes the inspection of goods is located in the inventory at the factory.
Some might have to do with approvals:
The purchase requisition is prepared by the production manager based on the production plan of the firm. Capital purchase requisition is also prepared by the purchase manager but it requires the approval of the VP Operations. After the approved requisition is received by the purchase manager, he prepares a purchase order and send one copy of the purchase order to the vendor, one copy to the production manager, and one copy to the inventory officer and one copy to ...
Education
- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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