Controls for Receiving (#7)

In this episode, we discuss the controls associated with the receiving function. This is a key area, since received goods need to be logged into the system properly in order to notify everyone that they are available for use. In addition, proper receiving assists the payables department in processing payments to suppliers. Key points in the podcast are:

  • Segregate the purchasing and receiving functions to reduce the possibility of fraud

  • Match receipts to authorizing purchase orders, to minimize the receipt of unauthorized goods

  • Use a checklist to examine all incoming goods, to keep from missing any review steps

  • Charge the buying department an internal fee when they go around the purchasing department to buy goods, to enforce procedural compliance

  • Tag and log all received goods immediately upon receipt, so that they are visible in the inventory database

  • Use bar codes to enhance the speed and accuracy of data entry

  • Use a data entry clerk to log in all receipts; this may increase efficiency

  • Maintain a receiving log, which is used for several accounting and auditing activities

  • Tag customer-owned goods as such, so that they are not counted as being company-owned

  • Use formal authorizations for the return of goods to the company

  • Use advance shipping notices to automatically enter entire truckloads into the inventory database

  • Certify suppliers in advance for direct deliveries to the production line, thereby avoiding the receiving department entirely

  • Create a supplier report card, to monitor their performance

Related Courses

Accounting Controls Guidebook
Accounting Information Systems