AUDIT OBJECTIVE:
	
To ensure that procurement department is functioning effectively in accordance with the policy and procedures of the Company.

Particulars	WP Ref	Done Y/N?	Executive/s of Auditee contacted	Date completed	Comments/Observation	

I. PLANNING	
1.	Determine & understand the related policies & procedures/ instruction manuals. 
2.	Interview the concerned personnel (through ICQ/ personal interaction)
3.	Review previous audit reports and follow up reports.
4.	Determine the areas or function that may involve risk
5.	Evaluate system of budgetary control maintained by the Procurement department.

II. AUDIT FIELD WORK

1.	To verify general controls:
1.1.	To check whether there is SAP manual in place to standardize the flow of activities within SAP.
1.2.	To review the process of management reporting and verify the exceptions reported, if any.
1.3.	Review the process of monitoring budgetary controls.
1.4.	Verify that the Procurement manual is in place which contains procedure for all types of procurement depending on business needs and also the flow of activities outside SAP.
1.5.	To review the process of registering a Vendor i.e. the vendor has been registered only after meeting the predefined criteria, after obtaining the required documents and appropriate approval. Take a sample to verify all the predefined requirements.
1.6.	To verify the process of keeping track of updation of vendor master data and controls over master data to ensure that the same has been updated only after obtaining appropriate approval. Take a sample to verify the documentation and completeness.
1.7.	To check whether track is maintained for time required at successive stages of the procurement process e.g. receipt of indents, floating of enquiries and placing of orders etc.
1.8.	To verify the process of reviewing open RFQ’s/ PO’s at regular intervals and follow up to close the same. Take a sample to check how the RFQ’s/ PO’s have been closed which are pending for long period.

2.	To verify controls at Purchase requisition stage:
2.1.	To review the process of receiving purchase requisitions i.e. purchase requisition contains all required details and has been received only after appropriate authorization as per DOP. Take a sample to verify the PR for completeness & authorization.
2.2.	To check the process of verifying budgetary controls before issuing RFQ. Take a sample to verify that the PR has been raised within budgetary limits.

3.	To verify controls at RFQ stage:
3.1.	Review the process of drafting RFQ i.e. RFQ contains complete technical specifications of the material, complete details of quantity required, payment terms and taxes have been mentioned separately etc. Take a sample to verify the completeness of RFQ.
3.2.	To check whether the procurement is in coordination with Material Management dept. i.e. for procurement of regular items, availability of the stock has been checked with MM dept. before issuing RFQ.
3.3.	To verify the process of compiling requirements for the purchase of common items to avail the benefit of bulk purchase.
3.4.	To verify the process of re-ordering material of regular consumption i.e. at what level order will be placed and how much quantity would be ordered.
3.5.	To check whether procurement of Proprietary Items has been made in accordance with Procurement Policy/Manual. Take a sample to verify the same.
3.6.	To check whether import procurement through agents are properly approved after carrying out cost benefit analysis considering the impact of custom duty and documenting the reasons/ benefits.
3.7.	To check whether RFQ called in two parts i.e. technical proposal and financial proposal in different sealed envelops.
3.8.	Review the process of issuing RFQ and documentation of the same. Take a sample to check that RFQ has been issued only to approved vendors existing in vendor database.
3.9.	Verify the process of setting evaluation methodology in lines with specifications.
3.10.	To check whether separate quotation box being kept and maintained to ensure the confidentiality of quotations.
3.11.	Take a sample to verify the evidence of the following:
3.11.1.	Whether quotations called from at least three approved vendors for each contract (other than proprietary items).
3.11.2.	Whether proper records of tender document requests from interested parties and tender document sold to interested parties has been maintained.
3.11.3.	Whether pre bid meeting conducted for clarifications.
3.11.4.	Whether technical and financial comparative sheet has been prepared for each contract to be awarded.
3.11.5.	To check that all pages of commercial bid initialed by members of tender opening committee.
3.11.6.	To check whether the RFQ is being approved by legal
3.12.	To review the process of opening quotations i.e. to check evidence that all the quotations have been opened at the same predefined time in presence of required people as per policy.
3.13.	To review the process of verifying/ approving technical bid of all the parties, by user dept, before comparing the financial bid.

4.	To verify controls at Negotiation and P.O/ Contracting stage:
4.1.	To check the process of conducting and documenting the post bid negotiations. Take a sample to verify the evidence of post bid negotiations.
4.2.	Take a sample to check whether the P.O/ contract to selected vendor have been approved as per DOP.
4.3.	Review the process of drafting the contract i.e. the contract has been drafted in lines with RFQ issued. Take a sample to verify the completeness.
4.4.	To check whether the contracts have been vetted by legal dept before awarding. Take a sample to verify the evidence of the same and incorporation of the legal dept. observations, if any, in the contract.
4.5.	Take a sample to check whether proper justification and appropriate approval is on record, in case any contract awarded to other than L1.
4.6.	Whether all the relevant clauses to safeguard the interest of the company e.g. levy of taxes, bank guarantee, performance guarantee, security deposit, liquidated damages etc. have been incorporated in the contracts terms and conditions.
4.7.	Review the process of obtaining acceptance from the vendor. Take a sample to verify the same.
4.8.	To check whether track of amendments in Purchase orders has been made and the same is duly approved and authorized as per DOP/ manuals. Take a sample to verify the reason and approval.

5.	To verify controls at Receipt of Materials and invoice verification stage:
5.1.	To verify whether control mechanism is in place for receipt of the material and acknowledgement of invoice or IOM.
5.2.	Review the process of getting certification of quality and quantity of material received before releasing the payment and utilizing the material. Take a sample to verify the certification of quality & quantity.
5.3.	To check the process of verifying, in accordance with the PO terms and condition, and approving the invoice. Take a sample to verify the same.

Audit Documentation- Prepare and file the related audit working papers.

Reporting
a)	Prepare summary of audit findings/observations
b)	Discuss the preliminary audit findings to the appropriate process owner/Dep’t/Div Head and obtain corrective actions.
c)	Prepare preliminary Audit Report and submit to AGM –MAG for review.
d)	Edit the report and prepare draft Audit Report

SUPERVISION, REVIEW AND CONCLUSIONS
a)	Conclude the report, responsive to the audit objectives.
b)	Prepare points regarding internal controls and other business matters.
c)	Perform senior review and supervision.
d)	Clear senior review points.						

AUDIT WORK DONE BY								REVIEWED BY

Associate Manager									Manager \ AGM