The primary control in the purchasing side of the finance cycle is that:
A) only purchasing officials should place the actual order.
B) payments only be made by an independent treasury function based on approved invoices from other departments.
C) payments only be made by the department that placed the order.
D) an audit trail must include a cost justification and vendor selection listing.

Question

Quizplus · Accepted Answer

The best control in the purchasing side of the finance cycle is that payments should only be made by an independent treasury function based on approved invoices from other departments. This ensures that there is oversight and separation of duties in the payment process, reducing the risk of fraud, error, or misuse of funds. Other controls, such as ensuring that only purchasing officials place the actual order or requiring a cost justification and vendor selection listing, are also important but not as critical as ensuring that payments are properly authorized and verified.

The Primary Control in the Purchasing Side of the Finance