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									Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

Obj. 1: Safeguarding of Assets

1.1

Authorisation – orders and payments are properly authorised according to the financial delegations set by the management.

Manual P/O (10 transactions) Please refer to test number 15 (objective 2.1) On-Line P/O (15 transactions) 1. Select several users and ensure that their access permissions are properly authorised. 2. Establish if access to the on-line P/O system are regularly monitored, access is tied to approved limits.

Funds Transfer Payment 3. Randomly select 15 sample of payments made via the FTP and establish the following:  payments were properly authorised;  adequate supporting documentation presented;  amount debited agreed with the invoice;  correct ledger account credited;  creditors are properly coded in the APCHT;  bank/eft details in Finance 1 agreed to the bank statement; and,  that creditors have authorised direct payments to their bank accounts.

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

1.2 Segregation of duties – requisitioning, purchasing, receiving, accounting and payment functions are segregated.

Manual P/O 4. Establish if the following are segregated at DSO level:  Raising requisitions (if used), PO & receiving goods  Approving payments. 5. If the above is not present, establish if there are any compensating controls, ie. a senior person than the purchasing officer to review the monthly expenditure report (please also refer to tests number 6 to 8).

On-line P/O 6. Ensure the ability to raise P/O and to sign goods as “delivered” (pass for payment authority) at Finance One are segregated across the University. FTP 7. Establish that these two functions within OFS are segregated:  Data entry of payment details  Authorising the direct debit from the university operating bank account to creditors’ bank accounts.

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

1.3

Management control – output reports reviewed at DSO level.

8.

Establish if DSO receive or print monthly transaction reports charged to their accounts. Evidence regular reviews undertaken by senior position on the above monthly reports. Such reviews should include identifying any abnormal payments and overdrawn accounts. Evidence follow-up actions on suspicious transactions.

9.

10. 1.4 Internal check – processing is checked at key points. eg. Purchasing Officer to check requisitions are authorised, Authorising Officer to check controls are operating.

Manual P/O 11. Select several invoices paid and establish if POs were properly authorised according to the approved Financial Delegations.

On-Line P/O Please refer to test number 2 & 6 (objective 1.1 and 1.2) 12. Discuss with Accounts Supervisor if there were invoices not processed because they were not properly authorised and establish the actions taken. By discussion establish how the GST the University paid is claimed back from the ATO. From the samples selected in test number 17, trace that input tax credit are obtained from the ATO on expenditures incurred.

1.5 The Australian Taxation Office (ATO) accurately and promptly refunds Input Tax Credit accrued to the University.

13.

14.

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

1.6 The presence of on-going budgetary control 15. and variance analysis.

Using result from the tests number 8 to 10 (objective 1.3) establish and evidence the monitoring of expenditure spent against the budgeted expenditure. Sight the follow-up undertaken on significant variances between the actual and budgeted expenditure. Ensure that follow up are undertaken by appropriately senior personnel within DSO.

16.

Objective 2: Compliance with laws, policies and procedures

2.1

Compliance with the Finance Policies and Procedures Manual, Murdoch’s Purchasing Policy and Management directives.

17.

Select 25 samples of payments consist of manual and on-line POs and CPAs processed and ensure the following: (i) P/Os were properly authorised, according to the approved financial delegations and within the authorised limits. (ii) Assets checked were presented for expenses $1,000 and above. (iii) CPAs are used for authorised purpose. (iv) POs match with the invoices. Sight any follow-up on the discrepancies between the two. (v) Sight the certifications to evidence that goods and services were received.

SCARE.doc

Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

2.2

The Goods and Services Tax (GST) requirements are properly incorporated into the expenditure and accounts payable processes.

18.

By discussion ascertain what are the mechanisms incorporated into the expenditure and accounts payable processes to ensure that the University complies with the GST requirements. Using the sample tested in test number 17, ensure that the new GST procedures were complied with.

19.

2.3

Procedures, practices and polices are documented and available to staff.

20.

Establish if the Finance Procedures and Policies are formally documented and that they are accessible by staff. Ascertain if procedures and policies are updated regularly to reflect any changes in the system Using the result from test number17 (objective 2.1), assess if the key controls are operating satisfactorily, ie. proper authorisation, use of correct medium of payments, etc.

21.

22.

Obj. 3: Accomplishment of Objectives and Goals

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

3.1

System objectives are documented and communicated.

23.

Discuss with several AP staff and establish if they are aware of OFS objectives and how is AP section contribute to their objectives. Select several DSO and obtain their feedback on AP services, ie. provision of financial information (in relations to expenditure data) promptly and accurately. Query for possible improvement on the AP services (noting the feedback from AP and DSO on the recent OFS review and its implementation).

24.

25.

For analysis on the trends and patterns of AP performance, please refer to tests number 26 to 29, and 34. 3.2 AP system performance is measured and monitored. 26. 27. Establish if there is a benchmark used to measure AP performances. Establish if there are on-going appraisals and measurement of AP staff performances and that feedback are given to the respective staff. Ascertain if statistics are prepared are reviewed and used to monitor and measure performance.

28.

SCARE.doc

Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

Obj. 4: Reliability and Integrity of Information

4.1

Transactions are processed on Finance One promptly, completely, and accurately and the correct ledger accounts are updated.

29. Using the samples in test number 17 (objective 2.1), establish the time lag between:  Date purchase order raised  Date invoice received  Data CPA received in AP  Date payment is processed (batch date)  Date cheque is run 30.a Using the samples in test number 17 (objective 2.1) ensure if accounts ledger are posted correctly, completely and accurately. 30.b. Establish if AP has regular mechanisms in place to detect duplicated payments. Using the samples in test number 17, note possible duplicated payments. Using ACL download AP processed from January to December 2000 and extract those payments which may be duplicated and consult AP with the results.

4.2

University operating bank account is accurately debited for the FTP transactions.

31. Using the samples tested in test number 3, agree the payments made to the bank statement.

Obj 5: Economical and Efficient Use of Resources

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

5.1

Transactions are processed on Finance One in an efficient, effective and economical manner.

32.

Evaluate and identify possible duplication of efforts in AP processing. Identify any DSO who are not utilising on-line P/O system, and assess reasons for non-usage. Use the monthly statistics before and after on-line PO system was in placed to assess the level of performance. Assess the impact of the on-line PO system on AP performance. Identify any DSO who are not utilising the credit card payment system and assess reasons fro non-usage. Use the monthly statistics before and after National Australia Bank Purchase Card (NABPC) was in placed and assess the level of performance. Assess the impact of the NABPC on AP performance. Assess the reasonableness on the result from the tests number 29 & 30 (objective 4.1).

33.

34.

35.

36.

37.

5.2

The university takes advantage of available discounts.

38. Discuss with the AP officers on level of discounts offered to university and discounts utilised. 39. From the samples used in test number 17 (objective 2.1) sight also discounts which were utilised and not utilised by the university. Obtain reasons for non-utilisation of discounts.

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Contributed February 6, 2001 by Pandy Lee <pandylee@central.murdoch.edu.au> MURDOCH UNIVERSITY – OFFICE OF INTERNAL AUDIT SPECIFIC CONTROL AND RISK EVALUATION AUDIT: Expenditure and Accounts Payable CONTROL OBJECTIVES TEST PLAN ACHIEVED Y/N AUDIT OBSERVATION REF. AUDIT W/P REF. PREPARED BY: Pandy & Ivy A.R.P. YEAR: 2001 INDEX: REVIEWED BY:

5.3

Expenditure and Accounts Payable processes are not duplicated between OFS and DSO.

40. Using the last OFS review identify the outcome reported on possible duplications of processes between OFS and DSO. 41. From the above list, identify if processes are still duplicated and establish if these processes could be streamlined. 42. By discussion with DSO and OFS personnel, identify other areas of duplications which may not have been reported in the review and suggest any possible streamlining of the processes duplicated.

5.4

The university uses less intensive manual payment process, ie, increasing the use of on-line purchase order and credit card.

43. Evaluate the efforts undertaken by FS to promote greater usage of the on-line P/O system and the credit card. 44. Establish if adequate training is provided to DSO on the operation of the on-line P/O system and credit card. 45. By discussion establish that OFS take prudent action in maximising returns from the funds held in the university operating account after taking into account funds committed in the Accounts Payable.

5.5

That the university maximises returns from its cash balances by actively managing accounts payable amounts.

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