Audit Programme - Manufacturing - Procure To Pay
Audit Programme - Manufacturing - Procure To Pay
Complete W/P
Process Analysis Procedures d by and Referenc
Date e
ORDERING ORDERING
parts:
- Stock items
- Non-stock items (Order)
- Tools
Open purchase orders are monitored on a daily basis 2.1 For the period under review, obtain the monthly
by Buyer who will print the Overdue Inbound Items “Open Purchase Order Reports” and verify that:
report and phone each and every supplier to ensure
the delivery date of the goods is confirmed. a. The report is generated regularly;
If the Buyer is not available to perform this function, b. Follow ups are conducted on the items
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the Inbound Manager will run the report and follow up listed on the report over 30 days; and
with the suppliers.
c. The report is signed as evidence of
There are no long outstanding purchase orders which review by Management.
indicates that management have monitored and
followed up on outstanding purchase orders but
management have not signed any report as evidence
of their follow up and review.
All supplier’s price lists are loaded on the FINANCIAL 3.1 Enquire from management whether they have a
SYSTEM system. The supplier price masterfiles on preferred supplier database and a listing for one
the system are maintained by the Procurement time / COD suppliers authorised by management.
Assistant.
3.2 Obtain the supplier masterfile exception reports
Price negotiations for suppliers are performed by the for pricing changes effected on the system for the
Procurement Consultant. These negotiated prices are period under review and perform the following:
signed off by the Commercial Director before updating
the FINANCIAL SYSTEM system. a. Verify that the report has been reviewed by
management (signed and dated as
The supplier pricing masterfile is maintained by the evidence of review).
Procurement Administrator, she will receive the
updated prices from the Procurement Consultant on a b. Inspect the date of review to verify a
adhoc basis, these are then loaded onto the timeous review has taken place.
FINANCIAL SYSTEM system using Price List
Maintenance per item report The effective date for c. Verify that management trace the
prices may be backdated and any purchase orders amendments on the report to the pre -
not yet receipted will be updated by the system to numbered approved masterfile amendment
reflect the updated price. The hardcopy supplier price
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viii.
Declaration of interests and one time vendors 4 Declaration of interests and one time
vendors
Declaration of interest forms are completed.
4.1 Enquire of management whether declaration of
One time suppliers / COD suppliers are used, these interests are obtained prior to adjudication of a
suppliers are not 30 day as they are usually small successful supplier;
businesses and for cash flow reasons have requested
payment upon invoice. 4.2 Determine if these declarations are adequately
controlled, signed, completed, filed and
All suppliers are loaded on the FINANCIAL SYSTEM reviewed on a regular basis.
system as suppliers and therefore a distiction cannot
be made between the 30, 45, 60 day suppliers and 4.3 Enquire of management whether buyers are
the one time suppliers / COD suppliers. A file is rotated between suppliers;
maintained in which all the remittance advices for the
one time supplier / COD supplier are filed. 4.4 Obtain the invoice listing by supplier name for
“one time suppliers” / COD's for the period
under review and ensure that:
Purchase orders may be amended in terms of quantity 5.1 Request a audit trail report of all amendments
and site (location). The prices of the items cannot be made to approved purchase orders and select a
changed on the purchase order as the price is loaded sample of 15 amendments. Verify the validity,
on the supplier price masterfile and is pulled through accuracy and approval of the amendments
onto the purchase order by the system. made.
Purchase orders are generated by FINANCIAL 6.1 Using the purchase orders selected above,
SYSTEM or MAINTENACE SYSTEM, purchase order ensure that purchase orders are controlled
numbers are generated by the relevant system and sequentially.
are in sequence. MAINTENACE SYSTEM purchase
orders are captured on FINANCIAL SYSTEM using 6.2 Enquire from management whether PO's may
manual vouchers once the invoice is received by be deleted from the system, document the
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Non stock items such as factory consumables (glue, 7.1 Obtain the monthly reports for retrospective
tape, etc) will be ordered by the Buyer via email with orders for the period under review and ensure
the supplier. Only upon receiving the items is a that it is signed and dated as evidence of timely
purchase order created by the FINANCIAL SYSTEM review by management.
system. Therefore the invoice date may be prior to the
purchase order date. 7.2 Using the retrospective orders report, select a
sample of 15 purchases for the period under
The Purchasing Policy is there to provide guidance on review and perform the following:
whether retrospective orders are permitted and for
which items may be ordered in this manner. a. Verify that the purchase was correctly
authorised and in terms of the delegation
framework.
RECEIVING RECEIVING
Goods delivered are receipted on the system against 8.1 Using the sample selected for the period under
specific purchase orders. review, obtain the corresponding supplier
delivery notes for the purchase orders selected
The receiving clerk will print from the system every
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morning the list of purchases orders due for delivery and perform the following:
by the suppliers for the day.
a. Agree the quantity and description of
The system will generate a unique sequential number goods
for each delivery (RC number). One purchase order
may have more than one receipt document if b. Verify that the Receiving clerk signed the
deliveries were made on different days and if part delivery note as acknowledgement of the
deliveries were made. details of the order as well as the
condition of the goods.
When deliveries are made
c. Ensure that the delivery note date on the
- The supplier delivery note is first agreed to the goods received voucher is later that the
related purchase order (quantity and description) order date.
before receipting against the purchase order by
the receiving clerk. d. Ensure that the invoice details are
correctly captured on the system (invoice
- The goods being delivered are stored details agree to purchase order details –
immediately in the warehouse and receipting on quantity, item and value)
the system is performed during or after the
delivery 8.2 Observe an order being received and confirm
the following:
- For the goods delivered, the receipting clerk will
capture the delivery note number on the system a. The Supplier delivery note is agreed to a
in place of the invoice number as the invoice is Purchase Order (quantity and description)
not always sent with the goods delivered. by the receiving clerk
- The receiving clerk acknowledges any b. The goods being delivered are stored
discrepancies on the supplier delivery note (if separately until it is captured in the
any) and returns the incorrect/defective goods Inventory system
with the driver.
c. The Receiving clerk acknowledges any
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- The Receiving clerk signs the supplier delivery discrepancies on the delivery note (if any)
note as acknowledgement of the details of the and returns the incorrect/defective goods.
order as well as the condition of the goods.
d. The Receiving clerk signs the supplier
- All relevant documentation is then sent to delivery note
creditors for review and processing.
Goods received not yet invoiced 9 Goods received not yet invoiced
There is a account for goods received, not yet 9.1 Obtain the "Goods received but not yet
invoiced. Management monitor these instances using invoiced" account reconciliations for the period
the supplier reconciliations as they would appear as a under review.
reconciling item.
9.2 Ensure that the opening balance agrees to
closing balance of the prior month
For all returned goods a return note is generated by 10.1 Enquire from management whether all returns
the system with a unique sequential number (RC to suppliers are recorded using standard
number) Returned notes processed by the receiving documentation. (Pre-numbered/ sequential
clerks are authorised by the Procurement Assistant or numbering) and are processed timeously on the
the Inbound Manager. system.
Return notes processed by the Procurement Assistant 10.2 Obtain the list of goods returned notes for the
or the Inbound Manager are not authorised. period under review, select a sample of 20
goods returned notes and perform the following:
These return notes reflect in the supplier sub ledger
and will reflect on the supplier reconciliation as a a. Obtain the goods returned note and
reconciling item until the supplier credit note is ensure it has been appropriately
received by the creditor clerk. The supplier credit authorised in terms of the authorisation
notes received are not captured onto the system as matrix.
the return note is previously captured.
b. Trace the document to the creditors
ledger verifying that it has been
accurately allocated to the creditors
account.
Company Name have negotiated contracts with their 11.1 Obtain a list of all expired contracts for the
suppliers for raw material and packaging. Although period under review, select a sample of 5
there are not contracts in place with all suppliers, expired contracts and inspect evidence that
suppliers are first approved by the Quality management have completed an evaluation of
Assessment (QA) Department before being loaded on quality and service for the contract.
the FINANCIAL SYSTEM system. There are agreed
upon terms and conditions for all of the suppliers. 11.2 Enquire from management what process is in
place to review these evaluation forms to
determine if the contract is to be renewed or
not.
Supplier pricing is maintained on the FINANCIAL 12.1 Obtain a list of all supplier invoices processed
SYSTEM system and therefore when the purchase (if not available use the payments and
order is raised on the system, the total due to the associated invoices) for the period under
supplier is available. When goods are delivered, the review, select a sample of 20 supplier invoices
recipting clerk will capture the delivery note number and perform the following:
on the system in place of the invoice number as the
invoice is always sent with the goods delivered. a. Agree the details per the invoice to the
purchase order and delivery note to ensure
All documentation received by receipting clerks are a 3 way match was performed before
sent to the creditor clerks on a daily basis. The processing.
creditor clerk will agree the supplier delivery note and
invoice to the purchase order and receiving document b. Inspect that the supplier invoice/
to ensure they agree. The transaction is then released supporting documents are stamped paid to
for payment on the system. prevent re-submission.
The system is configured to calculate the tax when 13.1 Select one of the invoices from the sample
raised on the purchase order. tax is only accounted above and trace the TAX amount to the input
for on the system once the goods have been TAX account to ensure the system is correctly
receipted. set up to account for TAX.
Company Name Directors meetings are held on a 14.1 Enquire from management whether they
monthly basis in which the following is discussed: perform a monthly variance analysis for Opex
and Capex and inspect evidence of analysis for
Brands (Income Statement, Balance Sheet, Cash the period under review
flow, Budget and year to date figures and Key
account commentry) 14.2 Ensure that the Opex and Capex is signed as
evidence of review by management on a
Manuafacturing / Production (Income Statement, monthly basis (timeously - before the 25th of
Balance Sheet, Cash flow, Budget and year to the next month)
date figures and Key account commentry)
14.3 Obtain a listing of cost centres, select a sample
Income Statement, Balance Sheet, Cash flow, of 5 cost centres, obtain the cost centre reports
Budget and year to date figures and Key account for the period under review and perform the
commentry following:
Report items (AR report, returns) a. Inspect that management are monitoring
budget versus actual figures on a monthly
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Creditors reconciliations are performed for all 15.1 Obtain the creditor listing for the period under
suppliers in which movement occurred in the supplier review, select a sample of 5 creditors and
account. If the supplier balance is zero and no perform the following:
movement occurred, no supplier reconciliation will be
prepared. Supplier reconciliations are prepared by the a. Recast the reconciliation
Creditors Clerks and reviewed by the Creditors
Manager. b. Ensure that the balance per the GL agrees
to the general ledger and the balance per
The supplier reconciliation is performed between the the suppliers statement agrees to suppliers
supplier general ledger account and the supplier statement
statement.
c. Ensure that the appropriate supporting
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Creditors aging is available on the system which is 16.1 Enquire from management what process is in
reviewed on a monthly basis to ensure creditors are place to facilitate the review of the creditors
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The creditors control account reconciliation is 17.1 Obtain the creditors control account
performed between the creditors control account on reconciliations for the period under review and
the balance sheet and the supplier age analysis. perform the following:
A further reconciliation is performed between the a. Verify that reconciliations are prepared on a
Payment Control Creditors Account and the payment monthly basis.
batches. There are 3 reconciliations per month, 30
days, 45 days and 60 day creditors. b. Inspect the reconciliation for evidence of
managments review (dated and signed).
Both the creditors control account and account
reconciliations are prepared by the Creditors Manager c. Verify that the reconciliation has been
and emailed to the Finance Manager for review. There reviewed by management timeously.
is evidence available of the review having being
performed. d. Verify that the reconciling items have been
adequately explained and followed up.
Payment batches are prepared by the Company 18.1 Obtain a list of EFT payments for the period
Name Creditors team. The Creditor Manager will under review, select a sample of 20 payments
email the creditors for 30, 45 and 60 days with their and perform the following:
associated batch number to the Cashbook Controller.
a. Ensure that the release of the electronic
The Cashbook Controller will print the batches and
prepare an excel payment schedule with the exact payment is performed by an authorised
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The System does not allow the same user to load and
release a payment. The system is loaded onto one of
the Cashbook Controller’s desktop computer. This is
the only access point for the NedInform system.
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Check, bank and cash controls 19 Cheque, bank and cash controls
There are not many new suppliers loaded on the 20.1 For the period under review obtain the monthly
supplier database. The procedure to follow to load supplier masterfile amendment report that
new suppliers is as follows: highlights significant changes to the supplier
database and verify that the exception reports
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Supplier credit application forms are completed by the are signed and dated as evidence of timely and
person requesting to use the particular supplier and independent review by mangement.
submitted to the creditor clerk who will capture the
details onto an excel spreadsheet which details the 20.2 Using the supplier masterfile amendment
progress of each supplier credit application. report, select a sample of 15 changes (must
include creations, amendments and deletions)
There are two types of supplier credit application and perform the following:
forms that may be completed by the user:
a. Ensure that each change is supported by
1. Supplier provided credit application form an pre-printed and pre-numbered masterfile
amendment form
2. Internally provided supplier credit application
form (used only for COD suppliers to enable b. Ensure that the masterfile amendment form
loading of the supplier on the FINANCIAL is authorised in terms of the authorisation
SYSTEM system for payment) matrix
Both of the above types of credit appliation forms are c. Ensure that the change was authorised
then approved by the Commercial Director or Chief prior to input on the system
Executive Officer or Finance Director.
d. Inspect if appropriate supporting
The supplier credit applications are then sent to the documentation is attached to the masterfile
supplier and once notification is received by the amendment form
creditor clerk that the application has been approved
by the supplier, the new supplier is loaded on the
FINANCIAL SYSTEM database.
ACCESS RIGHTS AND SEGREGATION OF DUTIES ACCESS RIGHTS AND SEGREGATION OF DUTIES
Access rights and segregation of duties 21 Access rights and segregation of duties
A staff organogram has been drafted and has officially 21.1 Obtain a copy of the user access profile to
been signed off. make changes to the supplier masterfile as well
as other key functions within the Procure to Pay
Cycle