MAP Industry Workshop 2: Internal Controls – Governance, Risk and Systems

Controls in Practice
Prepared By: Paul Ryan Balon

Case Study: Procurement to Payment Process

General Instructions:
 Form a team composed of FOUR members.
 Be ready to present the
results of your case study
during the workshop.
Kindly ensure that your
answers are presented
through MS PowerPoint.
 The team should select
only one of the five
identified key processes
below:

o Purchase Requisition (PR) processing and approval

o Purchase Order (PO) processing and approval
o Good Receiving (GR) and Posting
o Invoicing and Three-Way Matching
o Payment (Check processing to payment)

Background Information:

You were recently hired as an Analyst in one of the manufacturing

plant based in Mactan, Cebu. One day, your manager approached
you and requested that you be a part of the project team who will
review the existing Procurement to Payment process. The objective of project is to re-engineer the
existing process through the use of automation.

As part of the initial preparatory requirements, the project team is to prepare and accomplish the
following:

 Prepare a detailed process flowchart of the selected process. Sky is the limit. You are free to
develop the flow chart based on your understanding/research of the process

 Accomplish the following tables:

1. Objectives- Risks – Controls Mapping:

Objective Detailed Objectives Risks Controls

 Operations
Reporting
Compliance

Example:

Objective Detailed Objectives Risks Controls

Operations To award goods and Award the goods Purchase Request (PR) of
services at best and services goods and services is
price beyond budget processed and authorized
within budget limits
Performance
Indicator: 7% Purchase Order form is
procurement processed and authorized
savings (actual within budget limits
award vs. budget)
Bidding Committee (BIDCOM)
presentation and approval, if
applicable, should be within
authorized budget limits. Any
approvals beyond budget will
undergo Special Budget
Appropriation Request (SBAR)
process prior to BIDCOM
presentation.

2. Type of Controls

From the controls identified in the previous table, assess whether it is a directive, preventive,
detective, or corrective control:

Controls Directive Preventive Detective Corrective

Control 1
Control 2
Control 3

Example:

Controls Directive Preventive Detective Corrective

 Purchase Request Y
(PR) of goods and
services is
processed and
authorized within
budget limits
 Controls Directive Preventive Detective Corrective
 Finance uploads Y
the approved
budget per GL
account in the
system before the
start of the
accounting
period.
 PRs require the
input of the
budget code and
budget per GL
account.
 The system will
not allow PR
processing
without budget.
 Further, the
system will not
authorize
processing of
requests with
exhausted and/or
insufficient
budget.