This is a composite, illustrative scenario, not an account of a named client. A purchase order for a batch of raw material was dated 12 June, and the goods receipt note recording its arrival was dated 15 June — a sequence that, on its face, looked procedurally correct: order first, delivery after. The factory's own security gate entry register, checked as a corroborating source during a purchase cut-off walkthrough, showed the transporter's vehicle had actually entered the premises on 9 June, three days before the purchase order was even raised, meaning the goods had arrived and almost certainly been used before any approved order existed for them.
Why the PO and GRN dates alone did not reveal this
Both documents, taken together, told an internally consistent story — a purchase order followed a few days later by a receipt, which is exactly the pattern a reviewer glancing at the two dates would expect to see and accept. The inconsistency only existed against a third, independent source: the gate register, maintained by security staff with no stake in the purchasing process, and the transporter's own delivery slip, which was found filed separately in the stores department with a 9 June date stamped by the transporter at the point of delivery.
What the sequence check covered
- 01Selected a sample of purchase orders near period end and traced each to its GRN and gate entryMost matched in logical sequence. This one, and two others in the sample, showed the gate entry predating the purchase order.
- 02Obtained the transporter's delivery slip independently of the company's own recordsThe slip's date and the gate register's date agreed with each other and both predated the purchase order, corroborating each other rather than relying on either alone.
- 03Asked the purchasing team why the order had been raised after deliveryThe explanation was that the order had been placed verbally with the vendor to meet a production deadline, with the formal purchase order and receipt documentation completed afterward to 'regularise' the paperwork.
- 04Checked whether this bypassed any approval thresholdThe order value exceeded the limit requiring a second-level sign-off, which had been obtained on the backdated paperwork but had not actually existed at the time the commitment to buy was made.
| Source | Date |
|---|---|
| Purchase order (company record) | 12 June |
| Goods receipt note (company record) | 15 June |
| Security gate entry log (independent) | 9 June |
| Transporter delivery slip (independent) | 9 June |
What went into the file
- The gate register and transporter slip as the corroborating sources that established the actual delivery date.
- The three instances found in the widened sample, each documented with the same cross-reference method.
- A control finding on purchasing proceeding ahead of formal approval, with the paperwork then made to fit afterward rather than reflecting what actually happened.
- A recommendation that procurement approval thresholds be enforced before commitment to the vendor, not just before payment — since by the time payment is tested, the sequence has already been retrofitted.
How we think about this
A purchase order and a goods receipt note dated by the company can always be made to agree with each other, because the same team controls both. A gate entry log kept by security and a delivery slip stamped by an outside transporter cannot be coordinated after the fact nearly as easily, which is why cross-checking transaction dates against an independent, third-party-generated source is worth doing whenever the sequence itself is what's being tested.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Purchase & AP auditGoods receipt note (GRN) audit and the missing-GRN riskWhat to test when a client's GRNs do not exist or cannot be trusted, and how GRN-to-invoice timing is used as a cut-off indicator rather than a formality.
- Purchase & AP auditTesting purchase order approval controlsHow to test whether purchases above a threshold actually went through the approval matrix, and the invoice-splitting pattern that is the most common way around it.
- Audit documentationThe backdated approval a document timestamp caughtThe approval memo was dated the 28th. The file it came from was created on the 4th of the following month. Nobody had checked that before.
Free tools, no signup
Each one reads a file entirely in your browser — or, for two of them, just answers a few questions — and nothing is ever uploaded.
- GSTR-2B reconcilerMatches your purchase register against GSTR-2B — missing invoices either side, amount mismatches.
- Bank reconciliation checkerMatches your cash book against a bank statement — what's outstanding on each side.
- Fixed asset register checkDuplicate asset codes, missing location or useful life, negative net book value.
- Payroll red-flag scannerBank accounts shared across employees, and records missing an ID, PAN or salary.
- CARO applicability checkerAnswer a few questions about the company and see which CARO 2020 clauses likely apply.
- MSME payment delay checkerMSME-flagged invoices paid — or still unpaid — beyond the 45-day Section 22 limit.
- Related-party transaction screenerTransactions above a threshold you set with no approval reference, grouped by counterparty.
- Depreciation useful life checkerCompares a useful life in use against the Schedule II, Part C indicative figure.
- Materiality calculatorOverall and performance materiality against PBT, revenue, assets or equity, with reasoning shown.
- Sample size calculatorStatistical sample size for a test of controls or a substantive test of detail.