Audit Problem

Internal Control Questionnaire

Purchasing/Disbursement Cycle

QUESTIONNAIRE YES NO N/A REMARKS

1. Are all purchases made only on the basis of
approved purchase requisitions?
2. Is splitting orders to avoid higher levels of approval
prohibited?
3. Do the written authorizations such as purchase
orders indicate the prices, quantities, and other terms
of the orders?
4. Are all expenditures approved by the appropriate
levels of management?
a. Are approvals required from authorized
individuals in the requesting department?
b. Does purchasing compare approval on purchase
orders with signature/approval lists of personnel
authorized to approve them for the related
department?
c. Is additional review or special approval required
for expenditures exceeding a specific peso limit?
(the peso limit set by the company)
5. Are those individuals authorized to initiate capital
asset transactions identified and is there a clear
definition of the limits of their authority?
6. Are lists of approved vendors, specifications, current
pricing and terms made available to purchasing
department personnel?
7. Does the company have a centralized purchasing
system?
8. Is the purchasing function separate from the
accounting and receiving functions?
9. Is leasing in accordance with statutory regulations?
10. Are purchase requisition:
a. Required for all purchases of goods and
services?
b. Approved by an individual designated to
authorize requisitions?
c. Pre-numbered and controlled?
d. Is the appropriation/funding source to be charged
indicated by the person requesting the purchase?
11. Are purchase orders:
a. Pre-numbered and controlled?
b. Required for all nonexempt purchase except
small items purchased from petty cash?
c. Prepared only on the basis of purchase
requisitions approved by authorized persons?
d. Compared to unencumbered balances to avoid
budget over expenditure?
e. Approved by an authorized individual?
Audit Problem

f. Close at year-end?
12. Is an adequate record of open purchase orders and
agreements maintained?
13. Is there a policy statement with regard to conflicts of
interest, including employee-vendor relationships?
14. Are blanket purchase orders and long-term contracts
under adequate control?
a. Are blanket purchase orders used for only
essential receiving purchases?
b. Are purchases under blanket purchases orders
compared to the authorized quantity and peso
amount?
c. Are blanket purchase orders closed at fiscal year-
end?
15. Are checks prepared only on the basis of an
approved voucher package?
16. Are the individuals who prepare the checks other
than those who approve documents which give rise
to cash disbursements?
17. Are the one who signs the checks other than those
who approve invoices for payment?
18. Are the one who signs the checks review supporting
documentation prior to signing checks?
19. Are unissued checks properly secured?
20. Are there adequate controls over the custody and
use of mechanical check signer?
21. Is the coding used to post cash disbursements to the
general ledger adequately checked?
22. Are the summaries of cash disbursements prepared
for posting to the general ledger?
23. Does the management monitor information such as
unusual or significant transactions, disputes with
vendors, control overrides, long outstanding items,
etc.?
24. Does the management review reports on expenditure
activity?
25. Does internal control appear adequate for the
purchasing system overall?