PROGRESS FOR PROCESS
Make sure p-cards are not being used to purchase materials that
should be requisitioned through the purchasing department or
REPORTING AND ANALYSIS
It’s important vendors be evaluated to ensure they are providing the expected level of service and performance. However, historically, purchasing agents have done little reporting
and analysis because of the tremendous amount of resources
required to accumulate and report such information. Today’s
ERP systems have excellent reporting and analysis tools that
purchasing management can use to continuously track the service and performance levels of existing supply relationships.
Therefore, the internal auditor will want to ensure that purchasing management is using these tools to collect, consolidate, and analyze purchasing data.
The internal auditor should also consider using these tools
to perform analyses during the purchasing audit. For example, most ERP systems enable the auditor to easily obtain analyses of:
Purchase orders issued to certain vendors within a specified
Vendors that have made only partial delivery of ordered goods.
Vendor on-time delivery performance.
Goods ordered and received but not yet invoiced.
The average purchase order value per purchasing organization or purchasing group.
Auditors can use the system to determine vendors accounting for the highest, average, and lowest value of material purchases. Auditing departments also can compare activity among
different time periods. This can be used to identify changes
in purchasing activities and determine which purchasing organizations or groups of buyers have ordered from which vendors.
Because enterprise computing systems are integrated software packages, the days are long gone when internal auditors
could analyze procurement activities simply by requesting
approved requisitions and quotes documentation for a sample of purchase orders. If auditors are to conduct a comprehensive examination of procurement risks today, they must
understand the interaction among various components of an
enterprise computing system, as well as the control features
built into each one.
Although enterprise computing systems and other advanced
purchasing processes can be complex and challenging to audit,
their potential impact on the business world cannot be
ignored. Without internal audit initiative, skills, and savvy,
the company may fail to recognize opportunities for improving internal controls and efficiencies related to purchasing
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JUNE 2004 INTERNAL AUDITOR