Question

"Copies of purchase orders for the procurement of goods in an organization are sent to the receiving department so that the receipt of goods can be matched to the corresponding purchase order"

Assuming that the above control is operating effectively, which of the following issues should be detected and/or corrected on a timely basis?

a. goods were received from a vendor which were not ordered by the organization
b. a buyers for the organization entered the incorrect amount of goods in the purchase order that was sent to the vender
c. a manager in the receiving department overrides receiving controls to record the receipt of goods that do not actually exist
d. all of the above issues would be detected and corrected by an effectively operating control

Answer 1

If the control is operating effectively, it can detect and correct issues such as goods being received but not ordered, incorrect quantities in the purchase order, and fictitious receipts.

Step-by-step explanation:

Assuming that the control of sending copies of purchase orders to the receiving department is operating effectively, it can help detect and correct issues such as:

1. Goods were received from a vendor which were not ordered by the organization: If the receiving department receives goods that were not ordered, they can compare the received goods to the purchase orders to identify any discrepancies.
2. A buyer for the organization entered the incorrect amount of goods in the purchase order: By comparing the received goods to the purchase orders, any errors in the quantity of goods ordered can be detected and corrected.
3. A manager in the receiving department overrides receiving controls to record the receipt of goods that do not actually exist: The receiving department can compare the received goods to the purchase orders to identify any fictitious receipts.

Therefore, if the control is operating effectively, all of the above issues would be detected and corrected in a timely manner.