After completing this section, you should be able to do the following:
• Recall typical controls in the acquisitions cycle's ordering, receiving, and warehousing phases.
• Identify various forms (electronic or paper) used in the acquisitions cycle's ordering, receiving, and warehousing phases.
• Recall the processes in the acquisition cycle's ordering, receiving, and warehousing phases.
• Identify various types of errors or fraud that can occur if the acquisition cycle does not have adequate procedures or segregation of duties in the ordering, receiving, and warehousing phases.
The Acquisitions Cycle
The acquisitions cycle exists in all types of entities—government, not-for-profit, and for profit. Some of the most common ordering, receiving, and warehousing internal control objectives are
• authorization for the procurement of all goods and services at agreed-upon prices from approved vendors.
• all goods and services received are recorded and classified correctly and accurately.
• damaged or substandard goods are promptly identified and appropriate action is taken.
• payment is made for goods and services received and they have requisite quality.
• all goods are adequately safeguarded.
In many for profit entities, such as retail establishments and manufacturers, most transactions in the acquisitions cycle are for the procurement of either finished ...