Student Forums CMA Part 1 Section E: Internal Controls E.1. Governance, Risk, and Compliance Exam succes question about receiving function

Exam succes question about receiving function

  • This topic has 6 replies, 2 voices, and was last updated 3 years ago by Alexey Gnoevoy.
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  • #106932
    Alexey Gnoevoy
    Participant

    Hello,

    Can you help me to understand the correct answer in the following question please?

    CIA 1193 I.12 – “An audit of the receiving function at the company’s distribution center revealed inadequate control over receipts. Which of the following controls would be appropriate for the receiving function?”
    My answer:”Ensuer that the warehouse receiving department has a true cope of original purchase order”
    Correct answer:”Ensure that the warehouse receiving department has a purchase order copy with unit described, but both prices and quantities omitted”

    My confusion come’s out of how the warehouse recieving clerk and manager will check right quantitie of delivered goods and how could they sign documents without understanding how much was delivered? What if they recieve less or more? Without information about quantity those potential error will be discovered further more that can damage production pricess as example.

    Thank you!

Viewing 6 replies - 1 through 6 (of 6 total)
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  • #106938
    Brian Hock
    HOCK international

    Alexey,

    The receiving department needs only to record what was received. They are not the ones to determine if the correct quantity was received. So, they get the purchase order without the quantity indicated.

    This is because if they know how many there are supposed to be, they might conclude that the correct number was received if their count is close to what it was supposed to be. It also prevents them from being able to steal any units if an excess number was shipped.

    The receiving department is supposed to count without knowing what the number is supposed to be.

    This is similar to the inventory count when the counters do not know how many units there are supposed to be.

    Brian

    #106940
    Alexey Gnoevoy
    Participant

    Brian, Thank you! I will memorize it, because in my practice, our warehouse department recieve the original purchase order.

    #106941
    Alexey Gnoevoy
    Participant

    Brian, i found another confusing question related to my previous question.

    CMA 690 5.3 – “Multiple copies of each purchase order are prepared for record keeping and distribution with a copy of the purchase order sent to the vendor and one retained by the Purchasing Department. In addition, for proper informational flow and internal control purposes, a version of the purchase order would be distributed to the”
    Correct answer:”Account payable, Receiving and Inventory Control Department”

    Is not this answer cancell out previous correct answer?

    Excuse me for my persistant, just tryin to fully undestand the scope.

    Thank You!

    • This reply was modified 3 years ago by Alexey Gnoevoy.
    #106944
    Alexey Gnoevoy
    Participant

    Brian, i found another confusing question related to my previous question.

    CMA 690 5.3 – “Multiple copies of each purchase order are prepared for record keeping and distribution with a copy of the purchase order sent to the vendor and one retained by the Purchasing Department. In addition, for proper informational flow and internal control purposes, a version of the purchase order would be distributed to the”
    Correct answer:”Account payable, Receiving and Inventory Control Department”

    Is not this answer cancell out previous correct answer?

    Excuse me for my persistant, just tryin to fully undestand the scope.

    Thank You!

    #106949
    Brian Hock
    HOCK international

    Alexey,

    The question states “a version of the purchase order”, which could be a version without quantities.

    The fact that your company does not do this shows how different companies will do things differently. And it does not mean that one if better than the other. It is just that there are different ways that things are set up. The types of items received may be different, the values may be different, the size of the company will impact this.

    So, this gets back to learning how to identify the best answer, even if a couple may seem reasonable.

    Brian

    #106959
    Alexey Gnoevoy
    Participant

    Brian, now i uderstand, Thank you!

Viewing 6 replies - 1 through 6 (of 6 total)
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