Sarbanes Oxley (S404) Compliance

Work Plan
Purchasing and Account Payable

The review will consist of identifying appropriate controls for following risks.

Issue of Purchase Order

1. Purchase order (PO) can be raised on the basis of un-approved Purchase Request (PR) of user
department.
2. Unnecessary delay in issuance of PO after PR.
3. Duplicate purchase orders can be raised against same PR.
4. Particulars of PO does not match with those on PR
5. Lead time and response time considerations are not taken into account for order placement.
6. Purchase order raised to an unapproved supplier
7. Purchases made at higher rates than prevailing market rate.
8. User department specifications are not adhered for vendor.
9. Recurring purchases are not subject to periodic bids.
10. Vendors with poor performance service, quality and price criteria are on the approved vendor
list.
11. Changes in the vendor master files are unauthorized
12. PO may be raised with incorrect item price
13. Purchase order edited after approval or issue / editing to PO is unauthorized.
14. Purchasing authority limits are not documented or documented limits are not adhered to.
15. Old and open Purchase Orders are not regularly reviewed and closed in the system.
16. Proforma invoice received from the supplier gives incorrect specification of order.

Receiving of Materials
1. Warehouse / factory is informed for expected deliveries against orders placed.
2. Goods received in excess of the quantity ordered.
3. Goods received by unauthorized person
4. Purchases are not recorded on timely basis / inventory received but receiving document is not
prepared.
Sarbanes Oxley (S404) Compliance
Work Plan
Purchasing and Account Payable

5. Documents evidencing receipt of services is generated on timely basis.

6. Goods are received and receiving document generated without quality inspection.
7. At the end of the month receiving activities are not booked before closing.
8. Proper cut off procedures are not in place to ensure the recording of receipt in the correct
accounting period.

Payments
1. Advance payments are not approved on timely basis.
2. Advances are paid without appropriate supporting documentation.
3. Advance is paid more than organization’s standard rates.
4. Payments made for purchases / services not received or not upto standards.
5. Invoices received are not entered in the system on timely basis.
6. Wrong invoice particulars are entered in the system / invoices posted twice.
7. No follow up is done for invoice not received for goods/services received hence, liability not
recorded on timely basis.
8. Procedures are not in place to ensure that all liabilities are recorded on timely basis.
9. GL creditor balance is not in conformity with the suppliers module grand total.
10. A balance is not deleted from creditor balance upon settlement.
11. Balances are settled on FIFO basis instead of original settlement criteria.
12. Mechanism is not in place to detect incorrect invoices by suppliers.
13. Receiving document is made but appropriate accounts are no updated.
14. Payments made to incorrect vendor.
15. Fictitious payments are made.
16. Cheques remain undelivered or delivered with considerable delays.
17. Duplicate payments made.
18. Payment is made on the basis of a copy of supplier’s invoice.
19. Cheque generated for incorrect amount.
20. Tax deductions are not in accordance with relevant laws.