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Accounting Information System: The Expenditure Cycle Part 1 Walker Inc. Case 4

The document summarizes the expenditure cycle processes at Walker Inc., including the purchase processing and cash disbursement systems. For purchase processing, it describes how purchase orders are created and sent to various departments, goods are received and reconciled, and accounting records are updated. For cash disbursement, it outlines the process of paying invoices, updating records, and sending checks to vendors. It also identifies some internal control weaknesses like a lack of segregation of duties and supervision, and provides suggestions for improvements.

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Ratu Shavira
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1K views7 pages

Accounting Information System: The Expenditure Cycle Part 1 Walker Inc. Case 4

The document summarizes the expenditure cycle processes at Walker Inc., including the purchase processing and cash disbursement systems. For purchase processing, it describes how purchase orders are created and sent to various departments, goods are received and reconciled, and accounting records are updated. For cash disbursement, it outlines the process of paying invoices, updating records, and sending checks to vendors. It also identifies some internal control weaknesses like a lack of segregation of duties and supervision, and provides suggestions for improvements.

Uploaded by

Ratu Shavira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting Information System : The Expenditure Cycle Part 1

Walker Inc. Case 4

Lecturer :Asniati, SE, MBA, Ak, Ph,D

By :

RetnoLadytaPratiwi

RatuShavira 1610532025

Muhammad Agung 1710533029

Economic Faculty of Andalas University


Accounting Major
Padang 2019
Expenditure Cycle
a. Purchase Processing System
Walker Books starts its expenditure cycle from Purchasing Department that
monitors in computer all levels of available books, and listing its current inventory.
After that, the agent manually makes four hard copies of the purchase order. The first
copy is sent to account payable, the second one is sent to the vendor, the third one is
sent to the receiving department, and the fourth one is filed in the department.
Vendors will generally ship the product five business days of the order received. When
all goods arrive at receiving department, the corresponding packing slip always
accompanies those goods. The receiving department clerk unloads all goods and
reconciles the packing slips within the purchase order. After they unload the goods,
clerk manually makes three hard copies of receiving report. One copy goes with the
goods to werehouse, another is sent back to the purchasing department, and the final
copy is sent to the receiving department. At the werehouse, the copy is filed while the
goods are stored to the shelves. In the purchasing department, clerk receives this copy
of the receiving report and files it with the purchase orders.
While the account payable department receives all purchase order, it would be
temporarily filed until the respective invoices arrives from vendors. Upon receipt
invoice, the account payable clerk removes the purhase order from the temporary file
and reconciles the two documents. After that, clerk manually reports the liability in the
hard copy accounts payable subsidiary ledger. Finally, the clerk files the purchase order
and invoice in the account payable department. At the end, clerk prepares a hardcopy
journal vouchers and sends it to the general ledger department. Once the general
ledger department receives the vouchers, clerk examines it whether any errors and
enters all relevant data into the department PC, so they could update the appropriate
digital general ledger accounts.
(Purchasing System Flowchart)

(Purchasing system DFD)


Internal control weaknesses and Suggestion for improvement
Purchase System

Control Activities Weakness Suggestion

Transaction Authorities

the receiving dept. clerk unloads all


the goods and reconcile the packing
slips within the purchase order as Independent verificators should be
well.if there are missing items during placed in order to reconcile the packing
the goods unloading process, the slips within the purchase order.
Segregation of Duties
clerk could manipulate the
reconciliation report to avoid
problems.

Supervisors should be put in duty to


all the clerks are working make sure each clerk to do their duties
Supervision correctly.
unsupervised

Accounting Records

Access Control

Independent
Verification
b. Cash Disbursement
At the Cash Disbursements System, the account payable clerk periodically
reviews all the open account payable file for all due liabilities. In order to maximize
returns on invested cash, yet still take the advantage of vendors discount, and the
clerk will pull the invoice two days before its applicable due date. To finding an open
accounts payable file, as needed of payment, the clerk manually prepares a check for
the amount due the invoice. The hard copy accounts payable ledger is also being
updated by the accounts payable clerk. The check number, dollar amount, and other
pertinent data are manually recorded in the hard copy check register. After that, check
is sent to the cash disbursement department. Finally the invoice is discarded as it no
longer has any relevant information that hasnt recorded elsewhere. While the cash
disbursement clerk receives the unsigned check, she examines and ensuring that no
errors ever made. Since she already familiar with vendors that deal with Walker Books
Company, she could identify any false vendors of any payment made that seems
excessive. With assuming everything that appears in order, she signs the check using a
signature block displays the name of the assistant in treasurer, named Tyler
Maatthews. Only Mathhew’s signature that could validates a check from vendor.
Once the check is signed by Matthew, it is sent to the supplier directly. The
photocopy of the check is marked as paid and then filed into cash disbursement
department. The clerk then makes a journal voucher, which is sent to the general
ledger department. Once the general ledger department receives the journal voucher,
the clerk examines it for any errors and finally put it inyo the department PC to update
the appropriate digital general ledger accounts.
(Cash Disbursement Flowchart)

(Cash Disbursement DFD)


Internal control weaknesses and Suggestion for improvement

Cash Disbursement

Control Activities Weakness Suggestion

Transaction Authorities

Segregation of Duties

Accounting Records

Access Control

Independent
Verification

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