• Collusion between customers and sales invoicing departments controlled by sequential issue of delivery notes and independent check and despatch documentation to invoices.
• Failure to raise despatch documentation i.e. goods leave the premises without delivery notes.
• Improperly raised credit notes to cover misappropriation of cash and reduce customers debts.
• Cashiers - teeming and lading. Bank all monies collected and have a pay in slip as a proof of deposit.

PURCHASES AND CREDITORS

Potential errors or irregularities

• Liabilities being set up for goods that were not authorised or not received.
• Liabilities incurred but not recorded.
• Making payments without proper documents and authorisation.
• Misallocation of funds to the wrong general ledger accounts.
• Goods being returned without being recorded.

Implications of the above errors

• Loss of resources because of paying for goods never received. Unreliable records being kept.
• Understatement of liabilities hence disputes with suppliers.
• Paying for services and goods not received.
• Overstatement of expenses and creditors.
• Misstatement of various expense and accounts that do not show the true and fair view.
• Overstatement of purchases. Loss of receipts due to the company.

Preventive measures

•            Improve inspection procedures at goods inwards stage.
• 1. Specific employees should have authority and power for the requisition of goods.
  2. Requisitions should be serially numbered.
  3. Central buying system which ensures; buy in bulk discount, avoid clerical costs & small orders, know reliable suppliers, plan of Economic order quantity (EOQ) & lead times.
  4. Order should have delivery date and prices.
  5. LPO serially numbered.
  6. Good received note should be serially numbered.
  7. Before payment of invoices take them for approval.
• Pre-numbered goods received notes. (GRN)
  1. Matching of goods received note and suppliers invoices.
  2. Pre-numbered Local Purchase Order (LPO)
  3. Investigate unmatched GRN and LPO
• Before approval original documents must be completed. Once payment is made stamp “PAID” on the documents.
• Code all expenses and or amounts. Use budgetary control measures.
• Claims subject to numerical control. A genuine cheque can be presented for a second payment. This is a collusion between employee and supplier. Cheques should be immediately despatched to the payee and never go back to anyone who had to do with it especially the cashier.