ANALYSIS OF INTERNAL CONTROL ON PURCHASING ACTIVITY AT PT.XYZ

Abstract

The company should be aware of the importances of internal control in their activities to reduce the possibility of missappropriation, fraud, or human error. The objectives of this research is to evaluate the internal control on purchasing activity at PT XYZ. How the implementation, identify the weaknesses, and give recommendation to overvome those weaknesses. The scope of this research is focused on the control activities. The research method used is qualitative method using case study approach. The researcher does literature review and gathers actual primary data from the object research. During the research, researcher gets primary data through interview, documentation, and observation. During the research process, researcher found several weaknesses of internal control. First, the there is no written standard operating procedure (SOP), so the employee does not have any formal and compulsory instruction in doing their activities. Second, there is no receiving department, so there is no other department that able to cross check the purchasing activity that do by purchasing department. Third, Purchase Requisition does not show the date when spare part needed, so the purchasing department only purchases the first Purchase Requistion that came to them without knowing specific Purchase Requisition that might need to be prioritizes after severals Purchase Requisition. Fourth, copy of Purchase Order is not sent to the warehouse, so the warehouse migh confuse whether their request has been received or not and decide to send a new request that is meant for one request that lead the purchasing department to purchase incorrectly. For the better improvement in the company’s internal control system, there are several recommendations from the researcher. The company should make a written standard operating procedure for all activities, create a receiving department, create Purchase Requisition form with date columns or state the date when the spare part needed, send the copy of purchase order to the warehouse.