1
MCPPO Contracting Overview-Public
Purchasing Principles Questions and
Correct Answers
Public Purchasing Objectives: Answer: obtain the
materials, services and facilities required by public
organizations, when and where the materials, services,
and facilities are needed, at the best price reasonably
available through open, fair competition, at a
reasonable cost.
Price = ? Answer: contract amount
Cost =? Answer: What's paid to vendor and other
cost associated e.g., soft costs -time, research, etc.,
bid process, contract administration.
Key control activities related to procurement are:
Answer: #1-Establishing authority for approval of
transactions
#2-Estalishing responsibility for executing transactions
#3-Segregation of duties
Pretest - Stuvia US
,2
#4-Control of Access to Assets and Records
#5-Monitoring
#1-Establishing authority for approval of transactions
Answer: the organization should clearly establish and
document which position within the organization have
the authority to approve specific transactions.
#2-Estalishing responsibility for executing
transactions? Answer: The organization should clearly
establish and document which positions within the
organization are responsible for carrying out specifically
defined transactions and should provide a detailed
description of the procedures for carrying out and
documenting each type of transaction
#3-Segregation of duties? Answer: segregation of
duties means that no employee should be in a position
to carry out an improper transaction and then conceal
it. In other words, a single individual should not have
the ability to authorize a transaction, carry out the
transaction, records the transaction, maintain custody
of the assets resulting for the transaction, and control
Pretest - Stuvia US
, 3
the books and records relating to the transaction. For
example, in the context of procurement of supplies, no
single employee should be able to authorize a
purchase, issue a purchase order, verify receipt of the
ordered good, and approve payment of the resulting
invoices. Vesting absolute control in one person invites
embezzlement, theft and fraud, and collusion. These
duties should be segregated by assigning them to
several individuals.
#4-Control of Access to Assets and Records? Answer:
Reasonable care should be taken to maintain physical
security over assets. The term "assets" refers generally
to items, equipment, and furnishing that are the
property of the public organization. Inventories should
generally be maintained in locked storage areas
accessible only to designated individuals. The
organization should establish a sign-out system to keep
track of value items such as tool that are needed
temporarily by employees. items such as laptop
computers can be assigned on a long-term basis to
employees who need them, and a designated individual
should be responsible for maintaining records
pertaining to these assignments. the internal control
Pretest - Stuvia US
MCPPO Contracting Overview-Public
Purchasing Principles Questions and
Correct Answers
Public Purchasing Objectives: Answer: obtain the
materials, services and facilities required by public
organizations, when and where the materials, services,
and facilities are needed, at the best price reasonably
available through open, fair competition, at a
reasonable cost.
Price = ? Answer: contract amount
Cost =? Answer: What's paid to vendor and other
cost associated e.g., soft costs -time, research, etc.,
bid process, contract administration.
Key control activities related to procurement are:
Answer: #1-Establishing authority for approval of
transactions
#2-Estalishing responsibility for executing transactions
#3-Segregation of duties
Pretest - Stuvia US
,2
#4-Control of Access to Assets and Records
#5-Monitoring
#1-Establishing authority for approval of transactions
Answer: the organization should clearly establish and
document which position within the organization have
the authority to approve specific transactions.
#2-Estalishing responsibility for executing
transactions? Answer: The organization should clearly
establish and document which positions within the
organization are responsible for carrying out specifically
defined transactions and should provide a detailed
description of the procedures for carrying out and
documenting each type of transaction
#3-Segregation of duties? Answer: segregation of
duties means that no employee should be in a position
to carry out an improper transaction and then conceal
it. In other words, a single individual should not have
the ability to authorize a transaction, carry out the
transaction, records the transaction, maintain custody
of the assets resulting for the transaction, and control
Pretest - Stuvia US
, 3
the books and records relating to the transaction. For
example, in the context of procurement of supplies, no
single employee should be able to authorize a
purchase, issue a purchase order, verify receipt of the
ordered good, and approve payment of the resulting
invoices. Vesting absolute control in one person invites
embezzlement, theft and fraud, and collusion. These
duties should be segregated by assigning them to
several individuals.
#4-Control of Access to Assets and Records? Answer:
Reasonable care should be taken to maintain physical
security over assets. The term "assets" refers generally
to items, equipment, and furnishing that are the
property of the public organization. Inventories should
generally be maintained in locked storage areas
accessible only to designated individuals. The
organization should establish a sign-out system to keep
track of value items such as tool that are needed
temporarily by employees. items such as laptop
computers can be assigned on a long-term basis to
employees who need them, and a designated individual
should be responsible for maintaining records
pertaining to these assignments. the internal control
Pretest - Stuvia US
