Professional Documents
Culture Documents
WHAT IS TENDER?
In this system the entity invites suppliers to give their quotations. The supplier
with the lowest quotation wins the contract. It is a kind of contract mostly
followed by large organizations and governments when purchases are of large
value.
TYPES OF TENDER
Open Tender.
Restricted Tender
Negotiated Tender
ADVANTAGES & DISADVANTAGES
Advantages: Competitive Lower Cost Transparent Process
Disadvantages: Low Price usually Detriment of Quality Time consuming
WHAT IS SUBCONTRACTING?
Subcontracting refers to the process of entering a contractual agreement with an
outside person or company to perform a certain amount of work. The outside
person or company in this arrangement is known as a subcontractor. Many small
businesses hire subcontractors to assist with a wide variety of functions. Example:
A small business may use an outside firm to prepare its payroll.
SUBCONTRACTING IS ALSO KNOWN AS OUTSOURCING
Outsource means to send part of a companys work to outside providers to
simplify or reduce cost.
ADVANTAGES & DISADVANTAGES
Advantages: Cost Saving Increased Efficiency Continuity & Risk Management
Disadvantages: Loss of Managerial Control Quality Problems Hidden Costs
E-PURCHASING / E- PROCUREMENT
procurement is the business-to-business or business-to- consumer or business-togovernment purchase and sale of supplies, work, and services through the Internet. Eprocurement helps to achieve benefits such as increased efficiency and cost reduction.
EXAMPLES
Tyre warehouse near automobile manufacturing units. Petrol pumps in transport
undertaking. Aviation fuel pumps at airport.
Separation of duties
To ensure proper separation of duties, assign related buying functions to
different people. With proper segregation, no single person has complete
control over all buying activities.
Best practices:
Security of assets
Once you have received your purchased goods, secure the materials in a safe
location. To ensure that your resources are accounted for, periodically count
your inventory and compare the results with amounts shown on control
records.
Best practices:
Secure goods received in a restricted area.
Restrict inventory access to appropriate staff.
Lock goods and materials, and provide key or combination to as few people as
possible.
Keep inventory records and periodically calculate beginning and ending inventory
amounts.
Potential consequences if your assets have not been secured:
Theft of goods
Inventory shortages
Additional costs incurred for replacement of goods
Best practices:
Review supplier invoices for accuracy by comparing charges to purchase orders.
Verify that the goods and services purchased have been received.
Perform monthly reconciliations of operating ledgers to ensure accuracy and
timeliness of expenses.
GENERAL:
The primary responsibility of the Purchasing Department is to provide for the
purchase of materials, supplies, and services, with the objective that they will be
available at the proper time, in the proper place, in quantity, quality and price
consistent with the needs of the District.
This audit will concentrate on ensuring internal controls are in place to maintain
the objectives stated above.
AUDIT OBJECTIVES:
Comprehensive policies and procedures addressing purchasing activities have
been developed and documented;
The District is in compliance with the established policies and regulatory
requirements;
Validate that there is proper segregation of duties within the purchasing
department;
Ensure that adequate internal controls have been implemented to limit exposure
to unauthorized or inappropriate transactions;
Verify that transactions are processed in accordance with purchasing guidelines
and District policies and procedures.
PRELIMINARY WORK:
General
Completeness Testing
a.From the Purchase Order listing for the audit period, obtained from
CIMS, review the listing for numerical sequence of the POs and scan the
listing for any unusual amounts (i.e. frequently repeating amounts,
credit balances).
b.Ensure numerical
sequence of POs.
Vendor Testing
b.Review vendor list for inactive vendors (no activity for 3 or more
years)
c.Review vendor list for active vendors under several different
vendor numbers and the same address (duplicates).
d.Compare database of employee addresses to the vendor file
addresses. Review/investigate any matches (are they reasonable, is
there a Conflict of Interest Form on file).
e.Select a judgmental sample of sole source vendors to review and
verify the documentation for determination of the vendor as a sole
source.
under RS.10,000
RS.10,000 RS.24,999
over RS.25,000
i.For all POs selected for testing note whether: Ensure documentation is
original and free from alteration
ii.Additionally, for purchases between RS.10,000 and RS.25,000. test
the following:
Determine whether the purchases were competitively bid or phone quotes were
obtained.
Verify that the awarding criteria, was
one of the following:
purchase price
reputation
quality of goods/ services
specialty of district needs
past relationship
HUB
Ascertain how the vendor was selected and determine whether the selection was
reasonable and complied with policy.
Closed/
Outstanding POs
i.Select a judgmental
sample of POs to
verify the following:
Customer
Service
Miscellaneous
WORK PAPERS:
Organize all relevant work papers in a clear and logical and manner and cross
reference audit steps to their corresponding work papers.
Create a final index for the work paper bundle.
Compile and securely store audit CYA files for reference if needed.
THANK YOU
By
Raghav
9962869008
raghav057@ymail.com