问答题 4.Cherry Blossom Co (Cherry) manufactures custom made furniture and its year end is 30 April. The company purchases its raw materials from a wide range of suppliers. Below is a description of Cherry’s purchasing system. When production supervisors require raw materials, they complete a requisition form and this is submitted to the purchase ordering department. Requisition forms do not require authorisation and no reference is made to the current inventory levels of the materials being requested. Staff in the purchase ordering department use the requisitions to raise sequentially numbered purchase orders based on the approved suppliers list, which was last updated 24 months ago. The purchasing director authorises the orders prior to these being sent to the suppliers. When the goods are received, the warehouse department verifies the quantity to the suppliers despatch note and checks that the quality of the goods received are satisfactory. They complete a sequentially numbered goods received note (GRN) and send a copy of the GRN to the finance department. Purchase invoices are sent directly to the purchase ledger clerk, who stores them in a manual file until the end of each week. He then inputs them into the purchase ledger using batch controls and gives each invoice a unique number based on the supplier code. The invoices are reviewed and authorised for payment by the finance director,but the actual payment is only made 60 days after the invoice is input into the system. Required: In respect of the purchasing system of Cherry Blossom Co:(i) Identify and explain FIVE deficiencies; and (ii) Recommend a control to address each of these deficiencies. Note: The total marks will be split equally between each part. (10 marks)
【正确答案】Cherry Blossom Co’s (Cherry) purchasing system deficiencies and controls Deficiencies Requisition forms are completed by production supervisors but are not authorised. This increases the risk of fraudulent purchases, or of goods being ordered which are not required,leading to unnecessary cash outflows. Orders are being placed for goods without the inventory levels being checked first. This could result in goods being ordered which are not required, leading to unnecessary cash outflows. In addition, as the company does not currently monitor inventory levels, it could experience stock-outs resulting in the company being unable to meet customer orders. The purchase ordering department maintains an approved supplier list; however, this has not been updated for 24 months. As this list has not been recently updated, the suppliers being used may not be ideal with regards to price, quality and delivery times. This could result in Cherry paying increased costs for raw materials or receiving poorer quality goods. Goods are being received without any checks being made against purchase orders. This could result in Cherry receiving and subsequently paying for goods it did not order. In addition, if no check is made against the purchase order,then the company may have significant purchase orders which are outstanding, leading to loss of sales. Purchase invoices are manually filed by the purchase ledger clerk and only updated to the ledger on a weekly basis. Until the invoices are input into the system, there is a risk that they may be misplaced and not entered. This would result in an understatement of trade payables and Cherry failing to make payment to the suppliers on time. Purchase invoices are not being agreed to the relevant goods received notes (GRNs) prior to authorisation and payment by the finance director. This could result in invoices being paid for goods which were not received. Purchase invoices are not sequentially numbered. Failing to sequentially number them means that Cherry’s finance department are unable to monitor if all invoices have been completely recorded; this could result in a failure to make payment to a supplier on time. If the invoices are sequentially numbered, then a sequence check can be performed for any unrecorded invoices. Invoices are authorised by the finance director, but payment is only made 60 days after the invoice is input. There is the risk that Cherry is missing out on early settlement discounts. Also, failing to pay in accordance with the supplier’s payment terms can lead to a loss of supplier goodwill as well as the risk that suppliers may refuse to supply goods to Cherry. Controls Requisition forms should be authorised by the production manager or director prior to being sent to the purchase ordering department. This department should not process any unauthorised requisitions. The inventory system should be updated to record minimum/maximum required levels of raw materials. When completing the purchase order, the ordering clerk should check the current level of inventory on the system and only order if the quantity is within the set parameters. The company should set minimum authorised reorder levels for inventory items. The approved supplier list should be reviewed and updated as necessary. Going forward, it should be updated regularly, at least on an annual basis. A copy of the authorised order form should be sent to the warehouse department. This should then be checked to the goods when received. Once checked, the order should be sent to the purchase ordering department and logged as completed. On a regular basis, an ordering clerk should review the order file for any outstanding items. The purchase ledger clerk should record the invoices in the ledger on a daily rather than weekly basis. If this is not practical, then upon receipt of the invoices, each should be attributed a sequential number and filed. When these are logged into the ledger, the clerk should check that there are no breaks in the sequence. All purchase invoices should be matched to the related GRN;the details should be agreed prior to the invoice being logged in the purchase ledger. All purchase invoices should be sequentially numbered and on a regular basis a sequence check of unrecorded invoices should be performed. The policy of making payment after 60 days should be reviewed. Consideration should be given to earlier payment if the settlement discounts are sufficient. If not, invoices should be paid in accordance with the supplier’s payment terms.
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