Page 217 - F1 - AB Integrated Workbook STUDENT 2018-19

Financial systems and procedures

The purchasing system

2.1 Stages in the purchasing system

The main stages in the purchasing cycle and the issues to be considered are as
follows:

Staff decide what goods/services they wish to purchase
and produce a purchase requisition
Requisition

This is authorised by department supervisor and
passed to the purchasing/ordering department

Purchase department places order with suppliers

Ordering
Obtains several quotations to get competitive price
Order may require authorisation, especially if large

Goods should be inspected to ensure good condition
Goods received and quality is correct

A record should be kept of all goods received

Supplier bills company for goods/services

Invoice received Before recording in the accounts, checks are made to
ensure goods were received and price is correct

Recorded in company’s accounting system, manual or
Invoice recorded
computerised

A cheque is produced for the amount owing

Payment made This will be approved for payment by a senior manager
who will first check that the details on the cheque agree
with the invoices.

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