Verification is the process in which invoices and other bills are compared and reviewed to ensure that they are in accordance with the terms and conditions established in the authorization phase, supported by the documentation of commitments, prior to making payment.
If a small business has a purchasing person or department, many of these control procedures will be carried out by purchasing. There should be close coordination between purchasing and accounting, with the appropriate segregation of duties, if possible. In a sole proprietorship or a small business in which most or all of these functions are concentrated in one person or a small group of people, duties may be combined, but the basic control concepts are the same.
Receiving
For purchases of materials, supplies, and equipment or other items, there should be an independent process for:
Inspecting the goods received to ensure they arrive in good condition.
Physically counting, measuring, or weighing the goods received to ensure the quantity corresponds to the purchase order.
Preparing receiving reports, noting any discrepancies in terms of condition, quality, or quantity.
Registers should be maintained for:
Open purchase orders, for shipments not yet received
Purchase orders received but pending billing
Closed purchase orders, for shipments received and billed