Reference no: EM132788429

Gergasi Meat Enterprise buys and processes livestock for sale to supermarkets. In connection with your examination of the company's financial statements, you determine the following information about purchases and cash disbursements transactions in the expenditure cycle.

• Each purchasing staff submits a daily report of purchases to the plant superintendent. This report shows the dates of purchase and expected delivery, the vendor and the number, weights and type of livestock purchased. As shipments are received, any available plant employee counts the number of each type received and places a check mark besides this quantity on the purchasing report. When all shipments listed on the report have been received, the report is returned to the purchasing staff.
• Vendors' invoices, after a clerical check, are sent to the purchasing staff for approval and returned to the accounting department. A disbursement voucher and the checklists for the approved amount are prepared in the accounting department. The checklists are forwarded to the treasurer for signing. The treasurer's office sends the signed checklists directly to the purchasing staff for delivery to the vendor.

Required:

Problem a) Distinguish the function of a purchase requisition and a purchase order.

Problem b) Explain the possible errors that might result from conflict of duties between:

i) Purchasing functions and receiving functions;

ii) Disbursement functions and accounts payable.

Problem c) Identify five (5) weaknesses in the above system and suggest a suitable recommendation  for each of the weaknesses.

Problem d) Suggest three (3) tests of control for purchase transactions.