We looked at the checkpoints for vendor selection earlier, click here to learn about it. Now we will look at the checkpoints for Internal Audit in the requisitioning & ordering process.
Purchase requisitioning & purchase orders are one of critical processes from an information technology standpoint. The process starts with the time budget is approved. Giving below a brief of how the P2P process functions for your understanding.
For requisitioning, it is important to note if the purchase requisition has been linked to the budget, if not the possibility of raising multiple PRs and the control may get weakened at spending against the budget. Some of the critical observations noted at the PR level are raising a 0 value PR and keeping it open, keeping the PR open beyond the specific financial year, pre-dated/post-dated PRs, incorrect PR classification leading to the charge-off of inventory and lack of a maker-checker in the IT system.
Let us look at some of the key checkpoints in the requisitioning and ordering process:-
Some of the key observations noted in the Purchase order are pre-dated/post-dated PO, PO tolerance breached without exception approval, PR quantity changed after approval of PO and PO order quantity more than the PR quantity.
We will look at how receipt of goods & services work in our next article. Until next time!
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