Accountin Information System Chapter 13 ed.12 Solutions.docVIP

Chapter 13 Solutions Q13.3 Since the primary benefit of procurement cards is to give employee’s the ability to make small non-inventory purchases necessary for their area of responsibility be it office supplies, computer or office equipment, meals and/or travel expenses, a formal approval process for all purchases would negate the benefit of the procurement card. Therefore, the controls for procurement cards should be focus on the initial issuance of the card and subsequent reviews and audits of purchases made by employees entrusted with procurement cards. Employees receiving cards must be properly trained in their proper use and in the procurement card controls implemented by the organization. If employees know that any purchase they make can be the subject of subsequent review and audit, they are more likely to make legitimate purchases. Subsequent reviews and audits must also require proper documentation related to each purchase made with the procurement card. During procurement card training, it should be emphasized that employees will be required to produce original receipts or other formal documentation for all items purchased. P13.1 a. Require a purchase requisition from an operating department as authorization for preparation of all purchase orders. Before approving a purchase order, the purchasing manager should review the related purchase requisition. The purchasing manager also needs to ensure that orders are placed only with approved vendors. Also, company policy should require that purchasing agents disclose any financial interest or position which they hold in supplier companies, though this may be difficult to enforce. In addition, the purchasing manager should check to ensure that purchasing agents do not have investments in vendors on the approved vendor list. b. Warehouse personnel should be required to count goods received and acknowledge receipt of the specified quantity by signing a copy of the receiving report. This copy of the r