Question

What audit area should the company be prepared for the auditor to review all purchases?

Answer 1

Below are the areas mentioned for the auditor to review all purchases.

Approvals

It’s important to create a line of command and guidelines of confirming purchase orders as they were made and shipments as they were stored. An auditor should ensure to include the list of names that are needed for every step of the whole system. The audit must check signs and test dates of every transaction which manages the honesty of your approval process.The Purchases which are without the approval validation should be assigned for the investigation. The audit can disclose the fraud regarding the purchases when you check then process of approval.

Vendor Validation

The of vendors plays an integral role in the company’s profitability. Your audit must include guidelines to confirm that only verified vendors that follow the directions made by the company can be allowed for purchasing. The company's purchasing system must contain a guide for choosing vendors which are based on the quality of the stock and delivery timing and moreover to verify only approved vendors are being used, The audit must be upto a review of the vendor selection system to ensure that it is updated.

Quality Assessment

You must have a system by which you can check the quality of the inventory anytime and Ina continous manner until it is received. At the time of an audit, the list must contain a checking of those processes and comparison of the inventory reports you get from the customer the purchase return , faults founded at the time of delivery to your customers and the check in guidelines during the inventory went for the delivery purpose.

Communication

The communication inside of your company and your vendors communications must be checked to confirm the correctness and efficiency. For example, a purchasing audit of your communications process can be disclosed that which vendors does not get notices of a temporary status due to the inferior quality of product deliveries. The Memos and updates to purchasing executives within your company must reflect current approvals and company guidelines changes within the specific time frame.