Internal & operational audit: inspect the purchasing workflow
A fictional technology business has rapid infrastructure purchasing growth. Internal audit tests authorisation and separately reviews invoice-processing efficiency. Keep control compliance and operational effectiveness distinct.
Original Finance Circle audit scenario with fictional technology-company records. Microsoft public reporting is context only; these are not Microsoft purchases, policies or audit findings.
Independent Finance Circle learning material. The source organisation does not sponsor, author or endorse this exercise.
Clarify. Structure. Calculate. Defend.
Take 2 minutes to clarify the decision and definitions, 3 minutes to structure the analysis, then work the exhibits. Finish with a concise recommendation and answer a follow-up. The time is a suggested practice format, not an employer requirement.
Clarify before solving
What are the data basis and reporting boundary?
Original Finance Circle audit scenario with fictional technology-company records. Microsoft public reporting is context only; these are not Microsoft purchases, policies or audit findings.
Which assumptions can I use without requesting more data?
CAD thousands. Policy requires pre-commitment approval when a purchase is strictly greater than 50. A purchase exactly 50 is outside this test. The sample is not representative of the full population; do not project the error rate.
What decision am I expected to support?
Keep I1 and I3 unchanged. Reduce I2 and I4 to the 10-day target. Calculate the revised average and total cycle days saved across the sample.
Build your structure
- Purchase threshold and approval population
- Approval evidence and observed exceptions
- Separate invoice-cycle efficiency objective
- Root cause, achievable benefit and retesting
Use the branches that matter to this decision. A memorised framework is less useful than explaining why each analysis could change your recommendation.
Everything you need to work the case.
Assumptions & boundaries
- CAD thousands. Policy requires pre-commitment approval when a purchase is strictly greater than 50. A purchase exactly 50 is outside this test.
- The sample is not representative of the full population; do not project the error rate.
- Invoice cycle time is measured separately in calendar days from receipt to approved payment readiness. Target is 10 days or fewer, inclusive.
Purchase approvals
| Purchase | Amount | Approval timing |
|---|---|---|
| P1 | 40 | None |
| P2 | 60 | Before commitment |
| P3 | 90 | After commitment |
| P4 | 50 | None |
| P5 | 120 | Before commitment |
| P6 | 80 | No evidence |
Invoice processing sample
| Invoice | Cycle days |
|---|---|
| I1 | 8 |
| I2 | 14 |
| I3 | 10 |
| I4 | 16 |
Choose the responsibility. Solve the decision.
Each level uses the exhibits above and asks a different question. Your entries stay in this open page only; copy your work before leaving.
Apply the approval threshold.
Calculate in-scope purchases, exceptions and the sample exception rate.
Why is the purchase exactly 50 excluded?
Numerical checks compare your arithmetic with the case model. Written recommendations are self-practice and are not automatically graded.
03 · Reveal worked solution & decision guide
Expected numerical answers
- In-scope purchases
- 4 records
- Approval exceptions
- 2 records
- Approval sample exception rate
- 50 %
Work through the calculation
- P2, P3, P5 and P6 are in scope. P4 at exactly 50 is excluded under the stated policy.
- P3 is late and P6 lacks evidence. Exception rate = 2 / 4 = 50%.
A strong concise response
My calculation shows that in-scope purchases is 4 records; approval exceptions is 2 records; approval sample exception rate is 50 %. A missing or late approval is an exception to the specified control, not automatic proof of fraud or financial misstatement.
Answer the interviewer follow-up
Why is the purchase exactly 50 excluded?
The policy applies strictly above 50. Changing the operator from greater-than to greater-than-or-equal would change the defined scope.
Assessment rubric · 20 points
For self-review or mentor discussion. This rubric is not an automated written-answer grade or an employer scoring system.
Correctly derives all 3 numerical results for this level, keeps signs and units consistent, and explains the method.
Explains the objective: Apply the approval threshold. States the supplied scope, timing and metric definitions before calculating.
A missing or late approval is an exception to the specified control, not automatic proof of fraud or financial misstatement. Addresses the interviewer follow-up without contradicting the facts.
Leads with a clear conclusion, distinguishes facts from assumptions, and identifies the next evidence needed. Does not claim the source company asked or endorsed this question.
Use full precision until the final rounding. Alternative written recommendations may be reasonable if they respect the facts and explain assumptions. This is Finance Circle’s guide, not an official source-company answer.
Source & attribution
The references below identify the public reporting, hiring guidance, research or mock-interview material used for context. Finance Circle wrote the exercise and its answers. Illustrative figures are explicitly identified; they are not company results or findings.
Public context; Finance Circle’s scenario inputs are illustrative.
Source reviewed 30 October 2026. No external page is needed to answer this exercise. Company names and logos identify sources only. All trademarks belong to their respective owners.