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QUESTION 
Departmental functions
 
Which of the following is not a function of the purchasing department?
A 
Ensuring that only required goods are purchased 
B 
Ensuring that suppliers used give the best price 
C Paying 
suppliers' 
invoices 
D 
Negotiating discounts with suppliers
ANSWER 
The answer is C. Paying suppliers' invoices. 
 
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PART C: ACCOUNTING AND REPORTING SYSTEMS, CONTROLS AND COMPLIANCE 
 
214
 
5.2 Policies 
In any organisation there is a need for order, co-ordination and control to ensure efficiency. To achieve 
this, management often implement rules and procedures. For example there will be authorisation 
policies for the purchase of non-current assets, procedures for choosing new suppliers, procedures for 
accepting new customers, etc.
Policies and procedures may be grouped in the form of a 
policy manual
, perhaps stored on the 
organisation's computer network for easy reference. Although a policy manual is to be recommended as 
a form of control over the activities of employees, care must be taken that strict adherence to the rules 
does not create inflexibility.
5.3 Business transactions 
It was mentioned earlier that businesses come in all shapes and forms. However, there will be a number 
of types of transaction which will be common to most businesses.

Making 
sales 

Paying 
employees 

Making 
purchases 

Purchasing non-current assets 

Paying 
expenses 
This diagram shows, in a simplified form, the flow of funds, documentation and information. 
Effective systems and procedures should ensure that: 

Relationships with customers are effectively managed 

Relationships with suppliers are effectively managed 

Office functions interrelate properly and are not duplicated 
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CHAPTER 8
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THE ROLE OF ACCOUNTING