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The Purchase System

In: Business and Management

Submitted By Johnson26
Words 1569
Pages 7
The Purchases System:
Segregation of Duties
There appear to be several segregation of duties problems at Santa’sAttic.com that are the cause of many of the current problems that the company is experiencing. The first of these has to do with the lack of a purchasing department within the organization. The warehouse is currently responsible for reviewing the inventory records, the decision to purchase additional inventory, and maintaining and updating the actual inventory records. This violates the segregation of duties rules because the purchase is being authorized and carried out by the same person. In addition, the assets are being maintained by the same person who does the record keeping for the assets. If a separate purchasing function were to be created within Santa’sAttic.com’s environment, this could be eliminated. If this were to occur, the warehouse would review the inventory records and request authorization to purchase goods from the purchases department. If goods were needed, purchases would approve this request. Once the goods were purchased, they would be given to the warehouse for keeping. Finally, the warehouse would be responsible for updating the inventory records, once the good had been received.
Another segregation of duties problem at Santa’sAttic.com occurs within the accounts payable department. Currently, there is no general ledger department and therefore all updating of the general ledger is done within accounts payable. For this reason, accounts payable also does not utilize any form of verification, in terms of the creation of A/P subsidiary journals or journal vouchers, to post the liability to the general ledger. There is no summary sent from inventory control to the accounts payable department to reconcile the posted liabilities. Basically, this violates the segregation of duties rules because the custody of the cash is maintained by...

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