Weakness in internal control of procedure for purchase, Accounting Basics

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You have been engaged internal auditor by the management of Alden proprietary limited to review its internal control over the purchases, receipt, storage and issue of raw material. You have prepared the following comments which describe Alden's procedure:

1. They are no perpetual records; hence the store room clerks do not keep records of goods received or issued. To compensate for the perpetual records, a physical inventory count is taken monthly by storeroom clerks who are well supervised. Appropriate procedures are followed in making the inventory counts.

2. When ordered material arrives at Alden, they are received by store room clerks. The clerks count the merchandise and agree the counts to supplier's delivery docket. All suppliers' delivery dockets are initialled, dated and filled in the store room to serve as receiving report.

Required:

Describe the weakness in internal control and recommended improvements of Alden's procedure for the purchase, receipt, storage and issues raw material. Organise your answer with following headings:

Weakness, recommended improvement.


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