Purchasing Payables Control Matrix

Control Attributes
Cycle Reference Key Control Activity Potential Testing Procedures Account COSO Prevent/Detect FSA Frequency Man/Auto Fraud

Select a sample of purchase orders. Ensure purchase orders

Purchase orders are only created by authorized personnel were created by individuals with the proper authority limit.
within their authority limits. Purchase orders are controlled in a
Purchasing & manner that ensures all orders are accounted for (e.g Review that purchase orders are sequentially numbered and
Payables PP-01 sequentially numbered). controlled to ensure all are accounted for.
Obtain report listing changes made to existing purchase
Purchasing & Changes to purchase orders can only be made by an orders. Determine if changes made were by authorized
Payables PP-02 authorized person and are tracked by the system. individual and proper supporting documentation exists.
Select a sample of significant purchasing contracts. Determine
if a finance representative has reviewed the contracts. Review
Purchasing & Significant purchasing contracts are reviewed by a finance contracts for any items that may have accounting implications
Payables PP-03 representative for potential accounting implications. (e.g. rebate agreements, etc.)

Purchasing authority limits are reviewed on an annual basis to Review the approved authorization limits. Determine if this has
Purchasing & ensure they are accurate and reflect current business needs. been approved within the current year. Consider
Payables PP-04 Documented approval is given and retained. reasonableness of limits assigned.

Changes to vendor master data are reviewed and approved in

accordance with documented procedures and approved
authorization schedules. An edit report of all master data Select a sample of vendor master data edit reports and
changes is reviewed on a monthly basis and evidence of determine if it has been reviewed. Select a sample of changes
Purchasing & review is maintained. Vendor master data is reviewed by listed and trace to supporting documentation. Determine if
Payables PP-05 management for accuracy and on-going pertinence annually. documentation change was properly authorized.

Select a sample of invoices that have been processed for

payment. Ensure invoice amounts agree with approved
purchase order and receiving document

If difference exists between the purchase order, receiving

document and/or invoice determine how such items are
Purchase orders, receiving documents, and invoices are resolved. Obtain a current list of such unmatched items and
Purchasing & matched (manually or automatically) before payment is determine if any long-time outstanding documents remain.
Payables PP-06 processed. Obtain explanations for any such items.

The accounts payable subledger is reconciled monthly with

the related general ledger control account and adjustments Select a sample of accounts payable reconciliations. Ensure
are recorded for all differences. Reconciliation is reviewed by sub-ledger agrees with the general ledger and any reconciling
Purchasing & management and evidence of review is maintained. No items are properly supported. Determine if reconciliation was
Payables PP-07 significant unreconciled amounts remain. reviewed by an independent person.

Obtain listing of goods that have been received but not yet
invoiced and ensure management has reviewed. Review
listing for long-time outstanding items (greater than 90 days)
and obtain explanation for any such items.
Goods that have been received but not yet invoiced are
properly accrued at quarter-end. Such items are reviewed in Select a sample of receipts made just prior to and after period-
Purchasing & detail for any long-time outstanding items (greater than 90 end. Determine if they were properly included/excluded in the
Payables PP-08 days) and appropriate action is taken. period's accrual.

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2008 All rights reserved
Purchasing Payables Control Matrix

Control Attributes
Cycle Reference Key Control Activity Potential Testing Procedures Account COSO Prevent/Detect FSA Frequency Man/Auto Fraud
Review the accounts payable sub-ledger for debit balances
Accounts payable records are reviewed quarterly for that have been outstanding for a long period of time.
Purchasing & excessive, unusual, and/or old debit balances and appropriate Determine if management has performed follow-up
Payables PP-09 action is taken for any such items noted. procedures on these items.

Review procedures in place to ensure items without a

receiving document (e.g. services) are accrued in the proper
For items where a receiving document will never exist (e.g. period. This could include email inquiries to various
service items), a procedure is in place to identify and accrue departments requesting input on outstanding items or could
Purchasing & for liabilities incurred in the period for which invoices have not include a review of open purchase orders for which a receipt
Payables PP-10 yet been received. has not been made.
Within the system, attempt to enter a duplicate invoice
Purchasing & Invoices are not allowed to be entered twice due to system document number and determine if this is allowed by the
Payables PP-11 controls. system.
Observe physical controls in place to safeguard check stock
(e.g. locked drawer, safe, etc.) Document who has approval
Purchasing & Check stock is safeguarded and available for access only by as signor on the account. Review checks to ensure numerical
Payables PP-12 authorized individuals. sequence is in place.
Select a sample of cash disbursements. Trace amounts paid
All disbursements are approved, input into the system and to the bank statement and general ledger posting to ensure
Purchasing & recorded to the general ledger either manually or through an proper recording. Also, review payment log for approval by
Payables PP-13 integrated system. appropriate individual.

Bank accounts are reconciled monthly and all necessary Select a sample of significant bank accounts and review their
adjustments are recorded in the proper period. Reconciling reconciliations. Ensure totals agree to the general ledger and
items are investigated in a timely manner. Reconciliations reconciling items are properly supported and explain. Ensure
Purchasing & and adjustments are reviewed an approved by management calculations are in line with company policy. Ensure
Payables PP-14 and evidence of review is maintained. reconciliation is reviewed by an independent person.

Analysis of supplier rebates is performed on at least a

quarterly basis in accordance with defined procedures.
Source documentation and related approvals are maintained
to support the analysis. Required adjustments are made to Review adjustments made related to supplier rebates. Ensure
the general ledger to ensure the reserves reflect entries are in line with GAAP and company policy. Test for
Purchasing & management’s best estimate and are in accordance with proper review and approval of the analysis. Pay additonal
Payables PP-15 Company policy. attention to any rebates received prior to making purchases.
Purchasing & Vendor rebate agreements are approved according the Review a sample of vendor rebate agreements. Ensure
Payables PP-16 appropriate authority limits. agreements are approved in line with authority limits.

Select a sample of procurement card statement

Procurement cards are used in accordance with Company reconciliations. Ensure activity was reviewed by appropriate
policy regarding types of vendors and expenditures permitted. individual. Review a sample of activity to ensure spending was
Activity is reviewed on a monthly basis for compliance with in line with Company policy. Trace a sample of postings from
Purchasing & guidelines, unusual trends, or improprieties. Evidence of the purchasing card activity to the general ledger and
Payables PP-17 review is maintained. amounts are posted to the proper account.

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