OWS Ltd has been under the control of the same family Mr I and Mrs N Sane (who are now both 62 years old) for the past 30 years. During that time the company has expanded rapidly. Unfortunately it still operates a fairly simple manual-based/cheque-based purchasing system.
A document flowchart of the company’s current purchasing system is provided in Figure 9.11 below.
Identify the major internal controls within the company’s purchasing systems and, where appropriate, suggest possible improvements to the company’s purchasing system.
PR= Purchase requisition;
PO= Purchase Order;
QR = Quotation request;
SQ = Supplier Quotation;
N = File (Numerical Order);
POA = Purchase order acknowledgement;
DN = Delivery Note;
CR = Cheque Register;
Figure 9.11 OWS Ltd purchasing system – document flowchart