Question

An internal auditor discovered that fictitious purchases have been recorded by the purchase clerk. This indicates absence of which control?

• A. Purchase invoices are independently matched with purchase orders and goods received notes
• B. Goods received notes requires the signature individual who authorized the purchase
• C. Routine checks are performed by internal auditor fortnightly
• D. Purchase function and production function are clubbed in one department

Answer 1

The correct option is A Purchase invoices are independently matched with purchase orders and goods received notes

Purchases must be recorded in the books of account against the purchase order. At the same time, purchases has to be checked with the goods received note which is maintained by the store department.

While doing the purchase vouching, auditor have to ensure that all purchases are done against the purchase order with a cross check of goods received note.