Question

Planning and Understanding the Environment Control Objective: Understand the purchase cycle and related technology tools. Consider the following questions; review area narrative(s),

1 .policies and procedures; and discuss them with area management if necessary. - Does the company utilize procurement cards? Are administrative procedures designed to add, suspend and limit procurement card usage?
2 - Are spending limits for procurement cards reasonable and commensurate with job responsibilities?
3- Is a log maintained, listing to whom procurement cards are issued, including dollar limits?
4 Are these dollar limits authorized, including changes? - Is the process to establish pre-authorized spending limits reasonable?
5 - Do authorized users maintain a log of procurement card purchases that are matched with the monthly invoice?
6- Are expenditures reasonable in light of operations (including dollars, quantity and purchase type)?
7 - Are payables excessive regarding quantities, expected reserves or quantity discounts?
8 - Are approvals and authorized transactions evident and adequately controlled?
9- Do purchasing policies consider quantity discounts, authorization of vendors and transaction analysis?

Answer 1

The inquiry pertains to the company's use and management of procurement cards within the purchase cycle, which includes understanding administrative procedures, spending limits, logging of transactions, pre-authorization processes, and vendor management policies as part of effective financial management in a business context.

Step-by-step explanation:

The student is inquiring about the purchase cycle and the use of procurement cards, processes, and policies within a company.

Specially, questions focus on the administrative procedures for card management, spending limits and logs, understanding of pre-authorized spending limits, tracking and matching of invoices, rationality of expenditures, payables, and control mechanisms for approvals and policies around purchasing practices and discounts.

All of these elements are crucial for effective financial management and ensuring that company resources are utilized appropriately, which aligns with the objectives of business studies in college.