ACCA Applied Knowledge · Business and Technology · The relationship between accounting and other business functions
Kestrel Ltd's production manager has asked the purchasing department to buy a large quantity of components from a supplier owned by the manager's brother, without obtaining other quotes. Which control weakness is most clearly shown?
The weakness is the lack of segregation of duties and competitive quotes or tendering in supplier selection. The requesting manager is influencing the choice of a connected supplier, which creates a conflict of interest and risks poor value or fraud.
- ALack of segregation of duties and competitive tendering in the purchasing processCorrect
- BExcessive use of just-in-time delivery
- CFailure to reconcile the bank account monthly
Explanation
Buying from a connected supplier without competing quotes shows poor control over supplier selection and a potential conflict of interest, as the requester influences the choice. The scenario says nothing about JIT or bank reconciliation.
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