Below Are Three Procedures That Violate Common Internal Control Guidelines

question 8

Essay

Below are three procedures that violate common internal control guidelines over the purchasing function:
a.The company has never established any written policies regarding conflicts of interest for its buyers.
b.The company's buyers are allowed to select suppliers without submitting a list of bidders for review.
c.The same buyers who ask suppliers to submit requests for quotations receive the suppliers' bids directly from the mailroom.
Required: For each procedure,state one problem that could arise because of the failure to follow common guidelines in the purchasing function.

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Definitions:

Existing Firms

Companies or businesses that are currently in operation within a particular market or industry.

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.

Insurance Payment

A sum of money paid regularly to an insurance company for a policy, which provides financial protection against loss or harm.

Shipping Charges

The fees associated with the transport of goods from the seller to the buyer, often based on factors like weight, distance, and delivery speed.