ATG 383 - Expenditure Cycle - Matching Threats and Control Procedures
For each threat, select one or more controls that address the issue. Every control is matched to
one threat. Each threat has one or more controls. Controls may be both preventative and detective.
Threats
1. _____ Acquire goods for inflated prices.
2. _____ Acquire goods of inferior quality.
3. _____ Obtain goods from unauthorized
vendors.
4. _____ Vendors receive kickbacks from
purchasing agents.
5. _____ Goods that were not ordered are
accepted.
6. _____ Receiving does not accurately
count goods received.
7. _____ Inventory is stolen.
8. _____ Vendor miscalculates the total
amount due.
9. _____ Pay for goods not received.
10. _____ Pay full amount for purchases
rather than take discount.
11. _____ Same invoice paid for two times.
12. _____ A payment to a vendor is not
posted to the vendor's subsidiary ledger.
13. _____ Checks are issued to fictitious
vendors.
14. _____ Checks are stolen and used for
unauthorized purposes.
Controls
a) Bank reconciliation prepared by
individual who does not handle cash
receipts or disbursements.
b) Black out quantities on the purchase
order. Receiving clerk signs PO once
quantities are filled in.
c) Cancel invoices and supporting
documents when paid.
d) Check mathematical accuracy of vendor
invoices.
e) Collect and review vendor performance
data.
f) Compare quantities on vendor invoices
with quantities indicated on the copy of
the receiving reports.
g) Conduct periodic vendor audits.
h) Conduct physical inventory counts and
adjust records.
i) Document all transfers of inventory.
j) Establish policy of only paying original
invoices.
k) File invoices by due date.
l) Maintain price lists for frequently
purchased items.
m) Periodically reconcile subsidiary ledger
to A/P control account.
n) Purchases are charged to an account that
is the responsibility of the person
creating the requisition.
o) Receiving only accepts deliveries for
which it has a valid receiving report.
p) Require invoices to be accompanied by
completed voucher package.
q) Segregate authorization of payment
from check signing.
r) Sequentially prenumber checks and
account for their usage.
s) Software prevents creation of purchase
order unless vendor's name is on
approved vendor list.
t) Store inventory in secure locations.