Answer Happy

Match the threats in the left column to appropriate control procedures in the right column. More than one control may be applicable Control Procedure .. Accept only deliveries for which an approved purchase order exists b. Document all transfers of inventory - Threat 1. Failing to take available purchase discounts for prompt payment 2. Recording and posting errors in accounts payable 3. Paying for items not received 4. Kickbacks 5. Theft of inventory 6. Paying the same invoice twice 7. Stockouts 8. Purchasing items at inflated prices c. Restrict physical access to inventory d. File invoices by due date. e. Maintain a cash budget f Conduct an automated comparison of total change in cash to total changes in accounts payable. & Adopt a perpetual inventory system h. Require purchasing agents to disclose financial or personal interests in suppliers i Require purchases to be made only from approved suppliers. j. Restrict access to the supplier master data. k Restrict access to blank checks. 9. Misappropriation of cash 10. Purchasing goods of inferior quality 11. Wasted time and cost of returning unordered merchandise to suppliers 12. Accidental loss of purchasing data m 13. Disclosure of sensitive supplier information (c.g., banking data) 1 Issue checks only for complete voucher packages (receiving report, supplier invoice, and purchase order) Cancel or mark "Paid" supporting documents in voucher package when check is issued. 1. Carry out a regular backup of expenditure cycle database o Train employees in how to properly respond to gifts or incentives offered by suppliers. p. Hold purchasing managers responsible for costs of scrap and rework Ensure that someone other than the cashier reconciles bank accounts. 9

Match the terms with their definitions: 1. economic order quantity (EOQ) a 2. materials requirements planning (MRP) 3. just-in-time (JIT) inventory system c. 4. purchase requisition Document that creates a legal obligation to buy and pay for goods or services b. Method used to maintain the cash balance in the petty cash account The time to reorder inventory triggered when the quantity on hand falls to a predetermined level d. Document used to authorize a reduction in accounts payable because merchandise has been returned to a supplier e Inventory control system that triggers production based upon actual sales f Inventory control system that triggers production based on forecasted sales Document used only intemally to initiate the purchase of materials, supplies, or services h Process for approving supplier invoices based on a two-way match of the receiving report and purchase order 5. imprest fund 6. purchase order 7. kickbacks 8. procurement card