RISKS IMPACT LIKELIHOOD

Insufficient Vendor Information High Possible

Unauthorized Vendors Very High Possible

Insufficient Review of Vendor List High Likely

Brand Reputation Medium Possible
Failure To Examine Supplier Ability To Deliver Low Unlikely

Manipulated Reports High Likely

Collusion High Likely

Inappropriate Evaluation Criteria Medium Likely

Corrupt Influence Very High Almost

Inferior Quality of Supplies High Almost

Spoilage and Deficient Goods High Likely

Food Poisoning Very High Rare

Disturb Normal Flow of Goods Very High Likely

Excessive Levels of Inventory Very High Possible

Additional Cost of Supplies Purchased High Likely

Delayed and Advance Deliveries Very High Likely

Increase in Additional Expenses (Security, Utilitiy, Labor) Medium Possible

No Concrete Budget With The Supplier High Likely

Inaccurate List of Suppliers Very High Possible

Misinformation of the Potential Supplier High Rare
Improper Write-Offs Medium Possible
ASSESSMENT

Medium Risk

High Risk

High Risk
Low Risk
Low Risk

High Risk

High Risk

Medium Risk

Very High Risk

Very High Risk

High Risk
Low Risk

Very High Risk

 High Risk

High Risk

Very High Risk

Medium Risk

High Risk

Medium Risk
Low Risk
Low Risk
 CONTROLS
• Creation of defined procedures on authorization of vendors
• Through screening of vendors in relation to ability to deliver and relationship with existing clients
• Crafting of contracts with vendors defining the business requirements
• Creation of defined procedures for authorization of or changes in vendors
• Review of existing vendors
• Through screening or examination of vendors and their permits and other documents
• Regular review of vendor list and reassess vendors capabilities
• Ongoing monitoring of master vendor list
No required additonal controls
No required additonal controls
• The top management should monitor the purchasing department personally instead of depending solely
on the reports being made by the purchasing department.
• The top management should separate the duties into purchasing, receiving, and invoice instead of
having one department who purchases, receives, and reports to the top management.
• Reconciliation of reports, assign someone to double-check the reports if the money that was allotted
matches the money that was actually spent.

• The company should have a standard for qualified suppliers.

• Assign a different department whom will select qualified suppliers.
• Include in the policies of the company that whoever is caught of collusion will be given a proper sanction.
• Consistently monitor the operations of the purchasing department.
• Since referrals did not undergo much on the evaluation based on the company’s criteria, they must be
always given knowledge about the regulations of the company.
• Review the supplier’s verification and food safety records.
• Review and assess the supplier’s capabilities in producing quality goods.
• Purchasing workers are provided with existing rates, suppliers, requirement, and terms and condiitons to
ensure that transactions are made using only apporved terms commands
• The requesting department is obliged to provide the necessary purchase order for all inventories and
supplies to be purchased
• Requisitions of items to be purchased must review first before making approval of the requests and
before purchase transactions are made. The purchasing department is evaluated in a manner consistent
with management’s objectives in terms of improved quality and lower costs
• Purchasing personnel is provided with current prices, suppliers, specifications, and standards for the
quality of products to assure that the products to be acquired will be profitable
• Management knows how the procurement and receiving processes adds to customer satisfaction and the
overall goals of the business

• The purchasing system should be complementary to the production scheduling system.

• Implement proper inventory control procedures to ensure the right amount of supply needed.
• Purchasing staffs should use accurate forecast on determining appropriate order quantities to include in
the purchase orders which are enough to meet ongoing customer demand.
• Automate counting and monitoring of inventory items
No required additonal controls
• In production of goods, always double check the quality of the products before commercializing.
• With regards the remaining half of the supplier who came from referrals, they should always be oriented
or instructed about the company’s standards on the production.
• Physical inventory of the goods to be used is necessary before processing.
• The purchasing manager should examine and review the information from the Purchase orders before
giving its approval.
• Purchasing staffs should use accurate forecast on determining appropriate order quantities to include in
the purchase orders which are enough to meet ongoing customer demand.
• Implement proper inventory control procedures to ensure the right amount of supply needed.
• Automate counting and monitoring of inventory items
• Having a Contract negotiation such as strengthened product
• Manufacturer consultation will lessen the additional cost in the supplier.
• Double check the documentation
• Include a penalty cause in the contract
• Define order processing time
• The supplier should communicate with the purchasing department and tell the reasons of why the
delivery would be late or advance.
• Purchasing staffs should use accurate forecast on determining appropriate order quantities to include in
the purchase orders which are enough to meet ongoing customer demand.
• Implement cost control procedures
• Focus on savings
• Calculate expenses
• Create spending plan
• The purchasing department must record all the list of its suppliers to track and evaluate their
performance.
• New suppliers must be included in the authorized master file only if they meet the standards set by
management.
• The purchasing department must obtain inventories and supplies from a few known suppliers to
maximize the benefits of the number of purchases, to guarantee its qualities, and to match specific
customer demands.
No required additonal controls
No required additonal controls
 NATURE
• Preventive
• Preventive
• Corrective
• Preventive
• Corrective and Detective
• Preventive
• Preventive
• Preventive
N/A
N/A

• Preventive
• Preventive
• Detective

• Preventive
• Preventive
• Corrective/Directive
• Preventive

• Directive
• Preventive
• Preventive

• Preventive

• Preventive
• Preventive and Detective
• Preventive
• Directive

• Preventive
• Preventive
• Preventive
• Preventive/Detective

N/A

• Preventive
• Directive
• Detective
• Preventive
• Preventive
• Preventive/Directive
• Preventive/Detective
• Detective
• Detective

• Preventive
• Corrective
• Preventive
• Directive

• Preventive
•• Preventive
Preventive Control
• Corrective
• Directive

• Preventive/Detective
• Preventive
• Detective

N/A
N/A