PROCUREMENT CYCLE CHECKLIST

Name of Project: _______

World Bank Loan: _____
Audit Period: _________

Internal Control Checklist

Procurement Cycle

Topic Yes No N/A

General: ___ ___ ___
1. Are responsibilities for the requisitioning, purchasing and
receiving functions segregated from the invoice processing,
accounts payable, and general ledger functions? ___ ___
2. Are responsibilities for the purchasing function segregated from
the requisitioning and receiving functions?
3. Are responsibilities for the invoice processing and accounts ___ ___
payable functions segregated from the general ledger functions?
4. Are responsibilities for the disbursement preparation and
disbursement approval functions segregated from those for
recording cash disbursements and general ledger entries? ___ ___
5. Are responsibilities for the disbursement approval function
segregated from those for the disbursement preparation function?
6. Are responsibilities for entries in the cash disbursement records ___ ___
segregated from those for general ledger entries?
7. If EDP is used, is the principle of segregation of duties
maintained within processing activities? ___ ___
Requisitioning:
1. Are purchases of goods and services initiated by properly
authorized requisitions bearing the approval of officials designated ___ ___
to authorize requisitions?
2. Are requisitions prenumbered and are those numbers
controlled?
3. Is the appropriation to be charged indicated on the purchase
requisition by the person requesting the purchase?
4. Before commitment, are unobligated funds remaining under the ___ ___
appropriation verified by the accounting or budget department as
sufficient to meet the proposed expenditure? ___ ___
5. Are requests for special purpose (nonshelf items) materials or
personal services accompanied by technical specifications?
Purchasing: ___ ___
1. Are purchasing authorizations structured to give appropriate
recognition to the nature and size of purchases and the experience
of purchasing personnel?
2. Do approval procedures exist for purchase order and contract
issuance?
3. Are purchase prices periodically reviewed by a responsible
employee independent of the purchasing department? ___ ___
4. Are competitive bidding procedures used?
5. If practicable, are contract or purchasing officer's areas of
responsibility rotated on a regular basis? ___ ___
6. Do provisions in contracts for materials, services, or facilities
acquired on other than a fixed price basis provide for an audit of
contractors' costs, with payments subject to audit results?
7. Do procedures exist for public advertisement of nonshelf item
procurements in accordance with legal requirements?
8. Are recurring purchases and documentation of the justification ___ ___
for informal rather than competitive bids periodically reviewed?
9. Are policies regarding conflicts of interest and business practice
policies established, documented and distributed? ___ ___
10. Are purchase orders and contracts issued under numerical or
some other suitable control?
11. Are an adequate number of price quotations obtained before ___ ___
placing orders not subject to competitive bidding?
12. Is splitting orders prohibited to avoid higher levels of ___ ___
approval?
13. Are price lists and other appropriate records of price quotations
maintained by the purchasing department? ___ ___
14. Is a record of suppliers who have not met quality or other
performance standards by the purchasing department maintained?
15. Are procedures modified when funds disbursed under grant or
loan agreements and related regulations impose requirements that ___ ___
differ from the organization's normal policies?
16. Are procedures instituted to identify, before order entry, cost
and expenditures not allowable under donor financed programs? ___ ___
17. Is an adequate record of open purchase orders and agreements
maintained?
18. Are purchases made for the accommodation of employees ___ ___
prohibited or adequately controlled?
19. If construction contracts are to be awarded, are bid and
performance bonds considered? ___ ___
20. Does predetermining selection criteria exist for awarding
personal service or construction contracts and is adequate
documentation of the award process required?
21. Are changes to contracts or purchase orders subjected to the
same controls and approvals as the original agreement?
Receiving: ___ ___
1. Are receiving reports prepared for all purchased goods?
2. Do procedures exist for the filing of claims against carriers or
vendors for shortages or damaged materials? ___ ___
3. Are steps taken to ensure that goods received are accurately
counted and examined to see that they meet quality standards?
4. Is a permanent record of material received by the receiving ___ ___
department maintained?
5. Are receiving reports numerically accounted for or otherwise ___ ___
controlled to ensure that all receipts are reported to the accounting
department?
6. Are copies of receiving reports sent directly to purchasing, ___ ___
accounting, and, if appropriate, inventory record keeping?
7. Is a government technical representative assigned to monitor
and evaluate contractor performance and approve receipt of
services with respect to procurements of special purpose materials, ___ ___
services, or facilities?
8. If a receiving department is not used, do adequate procedures
exit to ensure that goods for which payment is made have been ___ ___
received and are verified by someone other than the individual
approving payment that goods have been received and meet
quality standards? ___ ___
Invoice Processing:
1. Do invoice processing procedures provide for:
a) obtainment directly from issuing departments of copies of ___ ___
purchase orders and receiving reports?
b) comparison of invoice quantities, prices, and terms with those
indicated on the purchase order? ___ ___
c) comparison of invoice quantities with those indicated on the
receiving reports?
d) as appropriate, checking accuracy of calculations?
2. Are all invoices received from vendors in a central location, ___ ___
such as the accounting department?
3. Do procedures exist ensuring that the accounts payable system
is properly accounting for unmatched receiving reports and ___ ___
invoices?
4. Are requests for progress-payments under long-term contracts
related to contractors' efforts and are they formally approved?
5. Do procedures exist for processing invoices not involving
materials or supplies (for example, lease or rental payments, utility
bills)?
6. Do procedures exist ensuring accurate account distribution of all ___ ___
entries resulting from invoice processing?
7. If applicable, is access to the EDP master vendor file limited to
employees authorized to make changes? ___ ___
8. Does the accounting department maintain a current list of those
authorized to approve expenditures?
9. Do procedures exist for submission and approval of ___ ___
reimbursement to employees for travel and other expenses?
10. Is control established by the accounting department over
invoices received before releasing them for departmental approval ___ ___
and other processing?
11. Is the distribution of charges in the accounting department
reviewed by a person competent to pass on the propriety of the ___ ___
distribution?
12. Are invoices (vouchers) reviewed and approved for
completeness of supporting documents and required clerical ___ ___
checking by a senior employee?
13. If an invoice is received from a supplier not previously dealt
with, are steps taken to ascertain that the supplier actually exists?
14. Are payments made only on the basis of original invoices? ___ ___
15. Is responsibility fixed for seeing that all cash discounts are
taken and if applicable, that any exemptions from applicable taxes
are claimed?
16. Are differences in invoice and purchase order price, terms,
shipping arrangements, or quantities referred to purchasing for ___ ___
review and approval?
17. Does the accounting department record and follow up partial
deliveries?
18. Are the accounting and purchasing departments promptly
notified of returned purchases, and are such purchases correlated
with vendor credit advices?
19. Is the program and expenditure account to be charged ___ ___
reviewed for propriety and budget conformity?
20. Do check signers or other responsible officials determine that
restricted cash funds are expended only for restricted purposes? ___ ___
21. If applicable, do procedures exist to ensure adjustment of the
reserve for encumbrances (obligations) when invoices are prepared ___ ___
for payment?
Accounts Payable, Encumbrances or Obligations:
1. Are statements from vendors compared on a regular basis with ___ ___
recorded amounts payable?
2. If an encumbrance (obligation) system is used, are outstanding ___ ___
purchase orders reconciled to the reserve for encumbrances
(obligations) on a monthly basis?
3. Are encumbrance (obligation) entries recorded only on the basis ___ ___
of approved purchase orders?
4. Do procedures exist ensuring that accounts payable and
encumbrances (obligations) are applied against the appropriate ___ ___
account?
5. Do procedures exist ensuring that department heads are notified
of payments made against accounts payable and encumbrances ___ ___
(obligations)?
6. Are trial balances of reserve for encumbrances (obligations) and
accounts payable prepared on a regular basis? ___ ___
7. Are trial balances footings checked and traced to the individual
items as well as comparing the total to the general ledger balance
by an employee other than the accounts payable clerk? ___ ___
8. Are transactions between funds in all affected funds posted in
the same accounting period and on a timely basis?
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