Business Processes 13 April 2024 Class

Business
Processes or
Transaction
Cycles
13 April 2024
Overview
A business process refers to a set of

activities that must be performed to
complete an end-to-end business
scenario.
2
Overview
▪ Hire to Retire ▪ Acquire to Dispose

▪ Order to Cash ▪ Record to Report
▪ Procure to Pay ▪ Close, Consolidate and
▪ Inventory to Deliver Report
▪ Plan to Produce
3
Hire to Retire
The hire to retire process, also known as the employee

lifecycle, is a critical business process that involves various
activities from recruiting and onboarding employees to their
separation from a company.
4
Hire to Retire
This includes:
a. Defining organizational structure and planning
b. Recruiting the workforce
c. Onboarding of hired employees
d. Management of the employee lifecycle - performance
management, career development, and succession
planning.
5
Hire to Retire
e. Administration managing time, compensation, leave and

absence, expenses for the workforce
f. Separation - including benefits management, offboarding,
exit interviews and collection of company property
6
Order to Cash
The order to cash business process includes everything that

happens in an organization from a customer places an order
until the payment is received and settled with the invoice.
7
Order to Cash
This includes:
a. Managing pricing and contracts
b. Creating and managing sales orders
c. Fulfillment of sales orders
d. Issuing customer invoices
e. Processing of customer rebates and recording customer
payments
f. Monitoring customer credit and collections
8
Procure to Pay
The procure to pay process is a term used to describe the

entire process of purchasing goods or services from a supplier
and paying for them.
9
Procure to Pay
This includes:
a. Identifying the need for goods or services
b. Supplier selection
c. Purchase order creation
d. Invoice receipt and verification
10
Procure to Pay
e. Invoice approval for payment

f. Payment of the invoice
g. Record-keeping and reporting
11
Inventory to deliver
The inventory to deliver business process involves managing

the flow of goods from receipt into a warehouse or
distribution center through to delivery to the customer.
12
This includes:
a. Define and manage warehouse operations
b. Process inbound goods
c. Manage inventory quality
d. Maintain inventory levels
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e. Manage inventory costs

f. Record and control costs
g. Process outbound goods
h. Manage freight and transportation
i. Control vendor managed inventory and consignment
inventory
j. Analyze warehouse performance
14
Plan to Produce
The term plan to produce is used to describe a collection of

business processes that an organization implements to
support the planning and execution of the production process.
15
Plan to Produce
Connection to Inventory to Deliver:

Inventory to deliver → Picking of Raw Materials
Plan to produce → Production Process
Inventory to deliver (again) → Put-away of finished goods
16
Plan to Produce
This includes:
a. Defining production strategies
b. Planning production operations
c. Running production operations
d. Outsourcing production orders - this can connect to the
Procure to Pay process
e. Control production quality
f. Track production costs
17
Acquire to Dispose
The acquire-to-dispose process involves managing the lifecycle

of both owned and leased assets from acquisition to disposal.
This process includes the acquisition, deployment,

maintenance, and eventual disposal of assets such as
equipment, vehicles, and property.
18
Acquire to Dispose
This includes:
a. Planning and budgeting of assets
b. Acquisition of the assets
c. Managing internal assets - including tracking asset usage,
ensuring the assets and optimizing asset performance.
d. Managing and reporting on asset financials - includes
depreciation, depletion
e. Repair and maintenance of internal assets
f. Retiring and disposal of assets
19
Record to Report
The record to report (R2R) process is sometimes referred to as

the financial recording and close process. The R2R process
involves the collection, analysis, and reporting of financial data
to make sure that the company's financial statements
accurately reflect its financial performance.
20
Record to Report
This includes:
a. Define the ledger and currency policies
b. Manage budgets
c. Maintain and manage cash and bank transactions
d. Record financial transactions
21
Record to Report
e. Close financial periods

f. Report and analyze financial and cash flow
g. Comply with tax, audit, and regulatory requirements
h. Manage fund accounting
22
Close, Consolidate and Report
Close, consolidate and report is the process by which

organizations accumulate and generate critical information
that both internal and external parties use to make strategic
decisions and measure success.
23
Consolidation and close is the process of collecting and

combining data from different activities, departments, or
business activities so that they may appear in financial
statements like the income statement, balance sheet & cash
flow statement.
24
This takes place at the end of an accounting period: the end of

the month, end of the quarter, end of the year (either
calendar or fiscal year).
25
SHORT ACTIVITY
Let’s challenge our minds…
The business processes approach leads to efficient processing
of large number of transactions because
a. Business processes are easier to computerize.
b. A large number of transactions within a given process can
be categorized into a relatively small number of distinct
types.
c. The business process approach represents the natural order
of business.
d.
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Business processes are easy to understand. 1
All business processes feed information directly into the
a. Governmental reports
b. Financing operations
c. Financial statements
d. General ledger and reporting system
28
1
After the auditor has prepared a flowchart of internal control
for sales and cash receipts transactions and evaluate the design
of the system, the auditor would perform tests of controls on all
control procedures
a. Documented in the flowchart.
b. Considered to be deficiencies that might allow errors to
enter the accounting system.
c. Considered to be strengths that the auditor plans to rely on
in assessing control risk.
d. That would aid in preventing irregularities.
29
1
A purpose of tests of controls for shipping is to determine
whether:
a. Billed goods are shipped
b. Shipments are made in accordance with approved sales
orders
c. Sales invoices are properly recorded
d. Shipping personnel route goods to related parties
30
1
When a company receives returned goods from a customer, the
business process to accept the return would most likely be a(n)
a. Administrative process
b. Expenditure process
c. Conversion process
d. Revenue process
31
1
Which of the following terms relates to the control of materials
being held for future production?
a. Routing
b. Inventory control
c. Work-in-process
d. Receiving
32
1
Which of the following can be a probing question to study the control over
completeness of purchase transactions?
a. Are prenumbered POs, receiving reports, and vouchers used and are the entire
sequences accounted for?
b. Is an authorized PO required before the receiving department can accept a
shipment or the accounts payable department can record a voucher?
c. Are prenumbered purchase requisitions used, and are they subsequently
matched with vendor invoices?
d. Is there a regular reconciliation of the inventory records with the file of unpaid
vouchers?
33
1
The procedure that would discourage the resubmission of
vendor invoices after they have been paid is
a. A requirement for double endorsement of checks
b. The cancellation of vouchers by accounting personnel
c. The cancellation of vouchers by treasurer personnel
d. The mailing of payments directly to payees by accounting
personnel.
34
1
The purchase order forwarded to the receiving department
indicates the vendor's name and the quantities of materials
ordered. This may possibly cause
a. Payment for unauthorized items

b. Payment for unauthorized vendors
c. Overpayment for incomplete deliveries
d. Delay in recording purchases
35
1
Which of the following prevents the occurrence of duplicate
payments to vendors?
a. Vendor's invoice is supported by a receiving report

b. Vendor's invoice is stamped "paid” by the check signer
c. Vendor's invoice is prenumbered and accounted for
d. Vendor's invoice is approved for authorized purchases
36
1
A large retail enterprise has established a policy that requires that the paymaster
deliver all unclaimed payroll checks to the internal auditing department at the end of
each payroll distribution day. This policy was most likely adopted in order to
a. Assure that employees who were absent on a payroll distribution day are not
paid for that day.
b. Prevent the paymaster from cashing checks that are unclaimed for several weeks
c. Prevent a bona fide employee's check from being claimed by another employee.
d. Detect any fictitious employee who may have been placed on the payroll.
37
1
An auditor would be most likely to learn of slow-moving
inventory through
a. Physical observation of inventory

b. Inquiry of stores personnel
c. Inquiry of sales
d. Review of perpetual inventory records
38
1
When verifying debits to a manufacturing company's perpetual
inventory records, an auditor would be most interested in
testing a sample of purchase
a. Approvals
b. Invoices
c. Requisitions
d. Orders
39
1
The officer who usually oversees the investing process
a. Treasurer
b. Controller
c. Chief executive officer
d. Chief Financial Officer
40
1
All corporate capital stock transactions should ultimately be
traced to the
a. Cash receipts journal

b. Numbered stock certificates
c. Cash disbursement journal
d. Minutes of the board of directors
41
1
“
Your positive action combined with
positive thinking results in success
-Shiv Khera
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Business

A business process refers to a set of

▪ Hire to Retire ▪ Acquire to Dispose

The hire to retire process, also known as the employee

e. Administration managing time, compensation, leave and

The order to cash business process includes everything that

The procure to pay process is a term used to describe the

e. Invoice approval for payment

The inventory to deliver business process involves managing

e. Manage inventory costs

The term plan to produce is used to describe a collection of

Connection to Inventory to Deliver:

The acquire-to-dispose process involves managing the lifecycle

This process includes the acquisition, deployment,

The record to report (R2R) process is sometimes referred to as

e. Close financial periods

Close, consolidate and report is the process by which

Consolidation and close is the process of collecting and

This takes place at the end of an accounting period: the end of

a. Payment for unauthorized items

a. Vendor's invoice is supported by a receiving report

a. Physical observation of inventory

a. Cash receipts journal

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