Question

You are an auditor studying the internal controls of a client receiving department where inventory purchases are received from vendors. You discover that this department merely unloads inventory from trucks and moves it by forklift to the inventory storage area. Clearly answer and explain each of the following: A.) What properly altered document should be sent to the receiving department prior to arrival of any inventory and what is its purpose? B.) What document should be prepared in receiving after each shipment arrives and what information should it contain? Be specific.

Answer 1

The Receiving Department should be provided with the following information:

1. Purchase Order (PO) No., placed with the supplier
2. Description of Goods
3. Quantity of Goods in Purchase Order
4. Quantity of Goods Expected to Arrive (in current lot, shipment)
5. Transporters Details
6. Weight of Goods

The above details should be provided so that it can be determined that shipment received is from an intended Supplier of desired goods and quantity, and is purchased by the client only.

The Receiving Department should further match the Quantity of Goods as Received from PO and the consignment note. Keep track of the PO if partially completed. Also should send confirmation note called Goods Received Note to Purchases and Invoice to Accounts Department so that they can keep a track w.r.t. PO and record Invoice in Books of Accounts. In case Quality need be checked for goods then intimation should be sent Quality Check Department too, before sending Invoice to Accounts Department.