Auditing Purchasing and Contracts

David McNamee 2004, Pleier Corporation CONTENTS "Auditing the Purchasing Department" This 160-page workbook is a complete course for you to better understand the role of purchasing in the organization, the major activities that go on within purchasing, the risks and exposures within each activity, and the key controls used by the most effective purchasing departments. This workbook also provides you with a set of preliminary survey questions to use in your audit, a framework to develop your own audit guides, an appreciation of the possible computer-assisted audit techniques available, an audit program for any and all parts of the purchasing function, and a set of references for further study. This workbook publication presents practical information including: The Role and Importance of Purchasing to the Organization Establishing Qualified Suppliers Requisitions RFI/RFP/RFQ The Bidding Process Awarding the Business Negotiated Award without Competitive Bid Terms and Conditions Purchase Orders, Work Orders and Contracts Special Topics: EDI and Barcoding Special Topics: Value Analysis Monitoring Performance of Suppliers Fraud by Vendors Fraud by Employees Resources for Further Study

"Purchasing and Contract Frauds" Contract Frauds This 98-page workbook contains hard-hitting discussions of the many aspects of fraud with exercises that will help the reader think seriously about this major issue that affects us all. This workbook presents practical information with study questions and case studies specifically covering: The Nature of Fraud Working with Auditors and Investigators Vendor Frauds: Case Studies Detecting and Deterring Vendor Frauds Employee Frauds: Case Studies Detecting and Deterring Employee Frauds Types of Contract Fraud Contract Fraud and Defenses Bibliography

Suggested Answers, Study Questions and Case Studies This 39-page workbook consists of 16 case studies designed in a question-and-answer format to raise your awareness of the many aspects of the purchasing function. These case studies specifically address:

Auditing Purchasing and Contracts

David McNamee 2004, Pleier Corporation The Role of Purchasing in the Organization Establishing Qualified Suppliers Requisitions RFI/RFP/RFQ The Bidding Process Awarding the Business Negotiated Award Without Competitive Bid Terms and Conditions Purchase Orders EDI & Barcoding Value Analysis Monitoring Performance by Suppliers Fraud by Vendors Fraud by Employees The Nature of Fraud Working with Auditors and Investigators Vendor Frauds: Case Studies Employee Frauds: Case Studies Detecting and Deterring Employee Frauds Types of Contract Fraud Contract Fraud and Defenses

Key Audit Planning Steps The 22-page workbook contains detailed audit planning steps and an actual preliminary survey questionnaire to facilitate a thorough audit of the purchasing function. Included are specific audit steps and approximately 230 questions addressing areas, including: The Role of Purchasing in the Organization Establishing Qualified Suppliers Requisitions RFI/RFP/RFQ The Bidding Process Awarding the Business Negotiated Award without Competitive Bid Terms and Conditions Purchase Orders EDI & Barcoding Value Analysis Monitoring Performance by Suppliers Fraud by Vendors Fraud by Employees

Fraud Risk Management The 18-slide PowerPoint offers a number of practical suggestions about Finding Fraud: Increasing Awareness and Detection through Risk Management & Internal Auditing. Suggestions include the following: Embezzlement of Fees Theft of Inventory: Dining Out A Prescription for Finding Fraud Contrasting Views on Fraud Risk Manager and Internal Auditors Finding Fraud

Auditing Purchasing and Contracts

David McNamee 2004, Pleier Corporation The Old Triangle of Fraud The New Triangle of Fraud Dealing with Fraud Risk Fraud Risk Management Fraud Auditing Practice Internal Audit Strategy

Measuring Purchasing Performance and Benchmarking The 15-slide PowerPoint offers a number of practical suggestions on how to measure purchasing performance and benchmarking. Suggestions include the following: Developing Performance Objectives 5 Elements to Measure Performance What Measures are Best Other Measures (Trends) Criteria for a Good Measure How to Use Measurements Key Performance Indicators The Total Cost of Ownership Performance and Quality The Four Myths or Four Truths? Measuring the Quality of Purchasing Services Turning the Tables on Purchasing

Benchmarking and Re-engineering Procurement Benchmarking is the process of measuring your operations against similar operations for the purpose of improving your business processes. The purpose of benchmarking is to improve products and processes to better meet customer needs. The linkage of the business process to customer needs is critical to effective benchmarking. This linkage can be strategic or tactical, although benchmarking studies are generally classified as a strategic competitive analysis tool. For the purchasing professional, benchmarking contracting and procurement means improving the purchasing process and purchasing products (procurements, reports, etc.) to meet the needs of internal customers (primarily other departments and senior management or the board of directors as a whole). The purchasing professional who wants to practice benchmarking must have a thorough understanding of: The critical business processes (and sub-processes, activities) The critical success factors for fulfilling customer needs, and The best measurements that will provide this information.

The 158-page workbook contains information and exercises on various issues, including the following areas: Benchmarking Contracting and Procurement Benchmarking for Continuous Improvement Preparing for a Benchmarking Study Planning the Benchmarking Study Searching for a Benchmark Partner Observing the Process Analyzing the Process Adapting the Knowledge Learned

Auditing Purchasing and Contracts

David McNamee 2004, Pleier Corporation Improving Our Processes Benchmarking Case Study Benchmarking Study Checklist: Contracting and Procurement Reengineering Purchasing and Warehousing Process Flow Charts and Other Process Mapping Tools Information Technology: EDI, Bar Codes and Beyond Supply Chain Optimization Reducing Cycle Time Case Study: Reengineering the Procurement Process Warehouse Reengineering Warehouse Redesign: Focusing on Costs and Customers Benchmarking Resources Reengineering Bibliography

The Potential of Purchasing Cards There is enormous potential for purchasing cards to improve purchasing efficiency and effectiveness for high-frequency, low-value purchases such as MRO commodities, as well as training, books, dues, subscriptions, and emergency repairs. Purchasing cards can be used to reduce purchasing and payment-processing costs by bypassing the purchase order/check request process and consolidating payments on many small items with one payment. For the purchasing professional, the adoption of purchasing cards empowers the user community to purchase the numerous low-value items they require for themselves, leaving purchasing professionals time to concentrate their efforts on projects where more value can be added. Implementing purchasing cards is a major project in reengineering. Various internal processes must be changed, systems reviewed for changes, and employees and supplier both have behavioral changes to make. Both project management and change management skills are important for success. This 10-page document offers help to the purchasing director in the form of describing: The 7 Steps to Assess the Need for Purchasing Cards The 20 Key Questions to Use in Interviewing the Provider The 10-Step Implementation Plan for Purchasing Cards

These tools, together with a thorough understanding of the organization's needs and wants, should be sufficient to get the project off the ground. Purchasing cards have yet to reach their full potential throughout the economy, but the future is bright as organizations use the purchasing card as a means of empowering the workforce and harnessing the special skills of the purchasing professional.