Your firm is the external auditor of Bestwood Engineering Ltd$.,$ which manufactures components for motor vehicles and sells them to

motor vehicle manufacturers and wholesalers. It has sales of $$25$ million and a profit before tax of $$1$ million. The company has a new

financial controller, who has asked for your advice on controls in the company's purchasing system.

Bestwood has separate accounting, purchasing, and receiving departments. Most purchases are requisitioned by the production

department, but other departments are able to raise requisitions for goods and services. The purchasing department is responsible for

obtaining goods and services for the company at the lowest price that is consistent with the required delivery date and quality, and for

ensuring their prompt delivery.

The accounting department is responsible for obtaining authorization of purchase invoices before they are input into the computer,

which posts them to the accounts payable sub$-$ledger and the general ledger. The accounting records are kept on a computer and

standard off$-$the$-$shelf accounting software is used. The accounting software maintains the accounts payable sub$-$ledger, accounts

receivable sub$-$ledger, general ledger, and payroll. The company does not maintain inventory records because it believes the cost of

maintaining these records outweighs the benefits.

The financial controller has explained that services include gas, electricity, telephone, repairs, and the short$-$term rentals of equipment

and vehicles.

Your answer is incorrect.

What procedures should be incorporated in the purchasing department to control the purchase and receipt of goods? $($Several

choices may be correct.$)$

Orders should be raised on receipt of an appropriately approved requisition

Bestwood should identify a list of approved suppliers

Orders should be placed over the phone by an authorized purchasing employee

Blank order forms should be kept in a secured location

Goods received should be inspected after they have been delivered

Details of goods received should be recorded on a pre$-$numbered goods received note

Outstanding orders should be tracked