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Procurement audit

CA Pooja Agarwal (Chartered Accountant) (3228 Points)

24 September 2015

one of my clients have made a post facto purchase.pls let me know what is the risk involved in that.

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5 Replies

Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 24 September 2015

Do you mean to say that the client has already made purchase and seeking a post facto permission/ authorisation of approving authority? Or are they following process such as getting quotations and comparing for lowest quote post facto? Need to have clarity about what is exactly being done post facto.

CA Pooja Agarwal (Chartered Accountant) (3228 Points)
Replied 24 September 2015

they are issuing the purchase order after receiving the goods

Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 24 September 2015

As a first step, please get explanation from the client as to why they do so.

This indicates that either the purchase module of the client's ERP system does not have adequate controls (if it allows recording of PO at a date after purchase date) or the controls are being circumvented by entering date of purchases later than their actual dates. If ERP does not have adequate controls, it cannot give reliable results as to periodic performance of the company.

Further, please check if the client follows a regular method of getting quotes from various suppliers and selecting the most economical quote or if there is a justification for not selecting the lowest quote.

Please do an end to end process review of purchases to identify any malpractices being done to cover which, this process gap is deliberately kept by the client.

Sanjay Vyas (Co-founder) (92 Points)
Replied 22 May 2018

As a procurement person I would look at the original tender documents as a start to see if they comply with the stated procurement policies of the organisation. Then I would look at the evaluation process against the stated selection criteria in the tender documents. I would look to see if the selection criteria and specification were appropriate or biased towards a particular product or supplier (technical assistance might be needed) . If they failed to pass this test then the process failed. This is usually where the problem is.

https://www.tendersontime.com/publish-tender/

debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 12 July 2019

Procurement Audits

Procurement is one of many process in project management. The procurement management is a process that describes how the resources should be managed until the closure of the contract. These include preparing the independent estimates, constraints, assumptions, procurement documents and identifying the list of sellers.

The procurement audit is one of the many processes in procurement management. A procurement audit is a project management process that reviews different contracts and contracting processes to determine the completeness, efficacy as well as the accuracy of the procurement process. It is a structured review that stems from the Plan Procurement Management process through the control procurement

It is basically a method in project management that formally evaluates the performance of the supplier based on the contract as well as the efficacy of the procurement tool. It is also used to create a record that can be used to shape and streamline the procurement practices of the organization