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FNSACC506 Implement and maintain internal control procedures: Assessment Task 4

Assessment Task 4 Instructions 

Carefully read the following: 

Garden Worx Pty Ltd is a company specialising in providing a wide range of garden products. It has six stores across Australia.

The company includes the CEO with a senior management team consisting of a Marketing Manager, Finance Manager and Operations Manager. The Marketing Manager is responsible for the four customer service staff located at head office. The Finance Manager is responsible for the Purchasing Officer and Administration Officer. The Operations Manager is responsible for the six store managers and retail staff. 

The Finance Manager has overall responsibility for all financial decisions.  The purchasing officer is responsible for all purchasing orders, although purchase orders are to be signed off by the CEO. The purchasing officer is new to the company having been employed since March. The company does not have a strong training or induction ethic. 

Assume the following performance indicators are in place for purchasing:

  • All purchases over $500 approved by the Finance Manager or CEO. 
  • All purchases over $500 supported by a Purchase Order signed by the purchasing officer based on approval from Finance Manager. 
  • All invoices from suppliers include purchase order number.

Review the following information from a recent audit of purchasing orders by the purchasing officer to assess whether the above performance indicators have been met. 

  • 40 purchase orders were reviewed from the period March to June 2017. A total of 80 purchase orders were issued during that time. 
  • 10 purchase orders were not signed by the purchasing officer.
  • Purchase Order #670 was for $640.  Approved by purchasing officer. Note says CEO was unavailable. 
  • Purchase Order #450 was for $920. Approved by purchasing officer. Note says CEO was unavailable. 
  • 40 invoices from suppliers were reviewed from the period March to June 2017. A total of 80 invoices were received during that time. 
  • Invoice 96 issued by Spades Pty Ltd on April 2 2017 did not include Purchase Order Number. Invoiced paid by purchasing officer on April 5 2017. 
  • Invoice 106 issued by Soils Pty Ltd on May 5 2017 did not include Purchase Order Number. Invoiced paid by purchasing officer on May 9 2017. 
  1. Internal controls evaluation report 

This assessment tasks requires you to write a short report (approximately 1 page) addressing the following:

  • Introduction – the purpose of the purchasing audit and the criteria against which the purchasing audit was evaluated.
  • Findings – assessment of whether performance indicators met.  
  • Recommendations – recommendations for action.

2. Implement recommendations

Assume that your recommendations have been accepted. In order to implement procedures, send an email to the all staff advising of the new procedures/checks. 

The text of the email should summarise the conclusions reached and changes to be made. 


Answer

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