Audit Program

2445 words 10 pages
ABCD 1234 AND COMPANY WLL Corporate Office | To: Head – Procurement & StoresCC: | From : Head – Internal Audit | Report No | Date : |

* Subject: Audit Report on Operations of ABCD 1234 AND COMPANY WLL.
We have done general operations audit of ABCD 1234 AND company WLL from 1.11.2012 to 20.11.2012 and submitting the draft audit report below..

Executive Summary: * There is no ABC analysis of the suppliers have been done by the company ( Refer finding # 1).
The Purchasing Department has not carried out an ABC analysis for suppliers and articles. As a result purchasing activities are not focusing its activities on the right suppliers and articles. Local purchases are done with only one supplier and overseas purchases are
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The lack of a focused approach could result in efforts not being spent in areas where the potential for savings is greater.
Risk
There is a risk of purchasing at higher price when materials are available for lower price in thw market since there is no comparison or any scientific methods are used for purchasing activities. Risk Rating : 3 ( min 1 max 5)
Recommendation
Purchasing Department should define its approach based on an analysis of its current spends using an A-B-C approach and refine its procurement strategy, the processes and roles and responsibilities accordingly. The classification of suppliers and articles based on defined criteria should be revisited at regular intervals (i.e. once a year). This should be documented in the Purchasing guidelines to ensure that it is followed consistently.
Saving Potential from ABC Analysis of Suppliers
Where ABC analysis for suppliers has not been carried out effectively, we estimated a savings of 1% of the volume of External ‘A’ suppliers. Therefore, a saving potential of RO xxx k has been calculated on purchasing volume of RO xxx k, as shown in
Table above.
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Statement of audited entity
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Planned deadline
<Please give the planned date for execution>
Responsible
<Please name the responsible person>
Statement of Internal Audit

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