Part A:
What are the five inter-related components of internal control? Briefly discuss them.
Part B:
A file maintained by the Accounts Department for one of Sharp's suppliers includes:
a. Copy of purchase requisition.
b. Goods received note.
c. Delivery note.
d. Purchase invoice.
e. Copy of remittance advice.
f. Supplier's statement.
Required:-
Describe the following:
(i) Why is it important that a department other than the Purchasing Department should raise a purchase requisition?
(ii) Even with a separate Purchasing Department (i.e. separate from the department that raises the purchase requisition), there is still a risk of fraud by staff in the Purchasing Department. In what way could a fraud take place, and how could controls be instituted to minimize the risk of such a fraud?
(iii) Why is each purchase invoice not sent with the goods to the Goods Received Department?
(iv) Why should the Goods Received Department not accept goods where there is no purchase order?