INTERNAL CONTROL OF PURCHASING TRANSACTIONS

Abstract

Purchasing is an activity related to the acquisition of goods and services and it has pervasive effect on the financial statement in a company. That is why the purchasing activities should be controlled by the company through internal controls. The objective of this research is to find out the implementation of purchasing accordance with purchasing procedure or not and to be done effectively. The methods of data collection which are used by researcher are literature, observation and documentation. Literature is useful for comparison between theories and its implementation in the work place whereas researcher gets information of the implementation through observation and documentation. In this research, writer found out the weaknesses of purchasing department of PT. YYZ in carrying out purchasing transactions. There are about segregation of duties, cash purchase procedure and purchase before authorization. It is because of the lack of internal control to prevent the frauds and it will be a high risks. Finally, the problem is about on time delivery report which is prepared by purchasing department is not accurate. It is because this department does not show the real performance that target is not achieved and the effect is the top management cannot give the best solution accordance with the problem. From the findings above, writer recommends purchasing procedure must be controlled, it should has a segregation of duties, purchasing manager should signs or authorizes purchase request before purchasing, and purchasing department can provide the actual on time delivery report accurately to the top management for discussion in the monthly meeting which is part of the monitoring activities in internal control.