Purchase and Sales Cycle Essay Sample

Figure 1-1 Purchases Cycle
Buying Review
Buying is a procedure of purchasing goods and services. It was done by every section of Hup Seng Industries Berhad. when they have the demands. wants. and demands to empower certain goods and services. The purchases rhythm starts with purchase requisition petition by assorted sections. The purchase requisition was sent to the buying section. After the related providers were reviewed and examined by the buying agents. purchase requisition will be approved and approved supplier citation will be issued. Purchase order will besides be issued and transcripts will be sent to several related parties. Before the goods are received by Logistic & A ; Warehousing section. the purchase order will be monitored and followed up. The goods will be examine and inspected by the Quality Management section every bit shortly as they are received. Goods received notes will be received right after the scrutiny and review were done and it will be given to the Accounts section in order to do a stock entering into relevant histories for future use.

Documents Involved
Purchase Requisition
Purchase requisitions were issued by assorted sections when the sections need certain goods and services. It contain information such as description of points. measure. monetary value scope. payment footings. required bringing day of the month. names and reference of suggested providers. and other relevant information. Purchase requisitions are frequently used as a proposal to the buying section in order to make up one’s mind whether the purchase is necessary and worthy. Approved Supplier Citation

Approved supplier citation will be issued by the sanctioned providers to the company when the buying section inquires them. The content of the citation includes description of points. exact monetary value. payment footings. bringing day of the month. name and reference of the providers and other information. These citations are used as company‚Äôs mention for them to make up one’s mind which provider to take. Purchase Order

Purchase order is a written gross revenues contract between the company and the provider. Detailss of the exact selling and services to be rendered are stated in the purchase order. Similar to the purchase requisition and approved supplier citation. it includes the specified monetary value. payment footings. measure. bringing day of the months. point description. transportation footings. and other duties. conditions and relevant information. It will be issued in 5 transcripts and sent to several sections and parties. which are. providers. Purchasing section. Logistic & A ; Warehousing section. Quality Management section. and Accounts section. Receiving Reports

Receiving study is a papers that records the grosss of goods. It is a transcript of purchase order which excludes the statement of measure. Adequate and independent count will be done by the staffs of the Logistic & A ; Warehousing section. Besides the sum of goods received. descriptions. day of the months and other information and information will be recorded so that comparings with the purchase order can be done easy. This papers is comparatively of import because the receiving of goods will take to acknowledgment of the liability of the company. Goods Received Notes

Goods received notes will be received after goods had received and examined. The Quality Management section will inspect on the quality and measure of the goods received. It will be issued after the Quality Management section had verified that the measure and quality are the same as the purchase order. Supplier Invoice

ALSO READ  Chile Case Analysis Essay

Supplier bill is besides known as the measure sent by the provider. It indicates the description and measure of the goods shipped. services provided. sum charged. footings of trade. hard currency price reductions and day of the month billed. Check

Cheque is one of the ways to pay for the goods and services received and clear the debt. It was signed and authorised by the Purchasing or Finance section of the company.

Departments Involved
Purchasing Department

To Store
To SupplierTo Accounting Department
Figure 1-2 Purchases Department
Buying section approves and accepts the purchase requisition to carry through the point requested by assorted sections. Buying agents are responsible to analyze. measure and inspect on the providers and choice whichever provider who gives the company the sensible monetary value. best quality. sensible footings of payments before the company made any purchase. Approved supplier citation will be compared by the Purchasing section so that the company can take a better provider among all the providers in the market. Purchase order will be issued one time the determination has been made. Other relevant paperss such as readying of missive of recognition will besides be issued by the Purchasing section. Finally. this section will supervise and follow up on the purchase orders until the goods are received. Logistic & A ; Warehousing Department/Production Department

To Bin Card

To Accounts Department
Figure 1-3 Stores-Receiving of Goods from Supplier
When the goods were received by the provider. the Logistic & A ; Warehousing section will mean the grosss and goods will be topographic points and stored decently. Before the goods were stored. the section will compare the goods received with the purchase order so that the exact sum and point received. right monetary value were charged. When the production section needed the goods for bring forthing intents. Logistic & A ; Warehousing section will reassign the sum they needed to them. When the goods were found faulty. ailments will be issue to the provider so that returns or replacing could be done. The processs that carried out was interceding on ailments with provider. return and/or replace the faulty goods received. and move on any deficit on measure. Quality Management Department

Quality Management section is responsible to look into and inspect on the quality and measure of the goods received from the provider. This section will turn out certificate on the goods received after the review. This will besides guarantee that. the merchandise made by the company is made by the stuffs which are defect-free. Reports will be sent to the Logistic & A ; Warehousing section if any defects were found so that ailments can be done every bit shortly as they are detected. Histories Department

Goods received notes will be transferred to the Accounts section after the stock checking for entering and future use intents. Besides. the Accounts section besides deals with the bills by providers and blessing of the payment verifier. Meanwhile. Accounts section have to maintain the back uping paperss such as purchase orders. bringing notes. and other related paperss in sequence filing manners. Furthermore. all of the buying activities and minutess related will be journalised and posted into the purchase leger and general leger by the Accounts section. Bank rapprochement statement will be prepared by them on a monthly footing excessively.

Figure 1-4 Accounts Department

Figure 1-5 Journalising and Posting the Purchase

To Cashier

Figure 1-6 Approving payment verifiers

ALSO READ  Kentucky Fried Chicken IMC approach Essay

Figure 1-7 Accounts Department

Figure 1-8 Accounts Department


Figure 1-9 Accounts Department


Figure 1-10 Accounts Department

Figure 1-11 Accounts Department


To Accounts Department To Supplier
Figure 1-12 Cashier-Approving Checks
Cashier will O.K. and clear up the checks which are needed to do the payment to the provider. Payment to provider is authorized by fiting the back uping paperss received from histories section such as payment verifier. purchase bill and remittal advice. Then. the teller will fix the check and obtain blessing of check. After that. the check will be given to supplier whereas the purchase bill will be returned back to histories section. The payment verifier will be kept by the teller. Internal Controls

Based on the purchase flow chart illustrated above. Hup Seng Industries Berhad has a comparatively strong internal control on their buying rhythm. The internal control of the administration is strong. Below are the illustrations of the grounds of strong internal control harmonizing to elements. Organizational Structure

Administration is indispensable to hold a good construction to hold a strong internal control. First. the administration must be good at distinguishing occupations and duties of the employees in the entity. For case. the buying agents are concerned about analyzing. inspecting and choosing the suited providers for the company and negotiate with them in order to acquire a better monetary value. sensible payment footings. and higher quality of goods and services. Meanwhile. employees in the Quality Management section are required to transport out professional reviews on the quality and measure of the goods received from the provider. Logistic & A ; Warehousing sections are responsible to take good attention of the detention of the goods and respond to the Purchasing section when deficit of goods arises. Accounts section will enter the balance in the general leger with the sum in the relevant histories right. Besides. they will besides update the bank rapprochement statement on a monthly footing. Segregation of Duties

Harmonizing to the purchase flow chart. the buying maps are segregated clearly from the requisitioning to the receiving maps. None of the sections are blending of the maps of mandate. recording. and detention of the plus. which are the three primary subdivision of the company. The mandates of purchase were made by the Purchasing section. However. when it comes to the recording of minutess. Histories section are to the full in charge of the occupation. Last. the detention. receiving and storing of the assets are to be done by the Logistic & A ; Warehousing section. Authorisation Controls

All of the minutess should necessitate the mandate and blessing by the individual or section in charge in order to forestall any incorrect or deceitful type of dealing. From the flow chart. it is clearly stated that the purchase requisition and purchase order will merely be approved and issued after the appropriate scrutinies on the provider and reviews of the intents of points to be purchased. Recording Control

This control is to guarantee that the authorized minutess are entered. Account section will be responsible to entree and record all of the minutess. Therefore. all of the related paperss are needed to be filed consequently in Accounts section. Other sections have the authorization to direct a transcript of any minutess to the Accounts section. Forces

Forces are the people employed by or active in an organisation. concern. or service. For case. the staffs in Quality Management section should be equipped themselves with suited and appropriate experiences. accomplishments and cognition in order to transport our reviews and scrutinies on the good received from the providers. These accomplishments will assist them in distinguishing the faultiness of the goods from all of the goods received. When accomplishments. cognition and experience were used at the right topographic point. the company could salvage more cost and clip. Another illustration is buying agents from the buying section should hold equal experience and accomplishments in order to take the suited provider out of the providers in the market. With the accomplishments. cognition and experience applied. the agents are able to negociate a better monetary value from the provider. Physical Detention Control

ALSO READ  Business information and their sources Essay

This improves the internal control by forestalling unauthorized entree to physical assets and change to paperss and records. Goods received are topographic points by the Logistic & A ; Warehousing section. Any appraisal of physical assets by the Production section or other sections must be authorised by the Logistic & A ; Warehousing section. Accounts section will transport out stocktaking one time in a piece to guarantee that larceny and embezzlement will non go on. Management

Hup Seng Industries Berhad has a clear cut direction system which will supply the sections a clear way. occupation assigned and duties. Purchasing section is responsible to roll up petition on point needed from assorted section. They should reach with the provider so as to happen out all the information about the points and make up one’s mind whichever benefits the company most. After that. purchase order will be issued and they will supervise and follow up the purchase orders until the goods are received. In the interim. at the Logistic & A ; Warehousing section. they will have and put the goods purchased. If there is any faulty. they will lodge ailments with the providers. return or replace the faulty goods. If there is any deficit of goods. they will organize a petition to buy points needed to the purchase section. Quality Management section will inspect and analyze on the goods received so that the goods received lucifer with the standards from the purchase order. Accounts section collects all the back uping paperss issued and received. Book-keeping will be done by them. Besides. payment verifier will be approved by them when there is an authorized goods purchased.

Hup Seng Industries Berhad maintains a strong control over its purchases rhythm every bit good as entering hard currency expense minutess. Other than those elements mentioned above under internal controls from the facet of organisational construction. segregation of responsibilities. mandate controls. entering control. forces. physical detention control and direction. to exemplify this. merely look at the policy imposed by the company which requires the buying agents to obtain competitory commands from several providers for individual purchases over a specified dollar sum or on-going purchases that are expected to aggregate to a specified sum. The agents compare the commands and urge one based on factors such as cost. quality. bringing. client support. and so on and so forth. In contrast. if Hup Seng Industries Berhad allows the buying agent to do purchases without first obtaining competitory commands from several providers. This increases the hazard that the company does non obtain the best monetary value or quality. It besides provides an chance for a dishonest employee to have kickbacks.