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In carrying out this test for the rights and obligations assertion, should the invoice be used or should the GRN and Approved Purchase order be used?
I’m asking because in some cases an invoice may be received before the actual item is owned by the purchaser, whereas in the GRN , this document actually states it has been received by the purchaser. I mention approved PO because even though the item mey be received , it may not be what was ordered.Why not do all of them?
You need to look at the invoice to ensure that the asset was bought and not simply rented.
The GRN gives evidence that the asset has been received before period end. Ownership would tend to pass then.
The PO gives evidence that the addition was properly approved and truly belongs to the organisation.
ok, so my other question is if the asset was rented , would the company receiving the asset have a GRN? i have never come across a situation which involves renting, its usually purchasing so thats why i’m asking.
No it wouldn’t have a GRN as GRN’s are normally used in the purchasing process, but it would need some way of making sure that the goods, such as a photocopier, it was renting had been supplied. So, to set up the rental payments (probably a standing order) the accounts department would probably ask the departmental manager for confirmation that the machine had been supplied.
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