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    Romney Ais13 PPT 13

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    Aj PotXzs Ü

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    © All Rights Reserved
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    Romney Ais13 PPT 13

    Uploaded by

    Aj PotXzs Ü
    149 views11 pages

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    romney_ais13_ppt_13 (1).pptx

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    149 views11 pages

    Romney Ais13 PPT 13

    Uploaded by

    Aj PotXzs Ü

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    The Expenditure Cycle: Purchasing

    to Cash Disbursements
    Chapter 13

    Copyright 2015 Pearson Education, Inc. 13-1


    Learning Objectives
    Explain the basic business activities and related
    information processing operations performed in
    the expenditure cycle.

    Discuss the key decisions to be made in the


    expenditure cycle, and identify the information
    needed to make those decisions.

    Identify major threats in the expenditure cycle,


    and evaluate the adequacy of various control
    procedures for dealing with those threats.
    Copyright 2015 Pearson Education, Inc.
    13-2
    Basic Expenditure Cycle Activities

    Order materials, supplies, and services


    Receive materials, supplies, and services
    Approve supplier (vendor) invoice
    Cash disbursement

    Copyright 2015 Pearson Education, Inc.


    13-3
    Order Goods (Materials/Supplies) or
    Services Processing Steps
    Identify what, when, and how much to purchase
    Source document: purchase requisition
    Choose a supplier
    Source document: purchase order

    Copyright 2015 Pearson Education, Inc.


    13-4
    Ordering Goods/Services
    Threats Controls
    1. Stockouts and excess 1 a. Perpetual inventory system
    inventory b. Bar-coding, RFID
    2. Purchasing items not needed 2 a. Review and approval of
    3. Purchasing items at inflated purchase requisitions
    prices 3 a. Price lists
    4. Purchasing goods of poor b. Competitive bids
    quality 4 a. Use approved suppliers
    5 a. Monitor supplier
    5. Unreliable suppliers
    performance
    6. Purchasing from
    b. Require quality certification
    unauthorized suppliers
    6 a. Purchase from approved
    7. Kickbacks
    suppliers
    7 a. Supplier audits
    Copyright 2015 Pearson Education, Inc. b. Prohibit gifts 13-5
    Receiving Process

    Goods arrive
    Verify goods ordered against the purchase order
    (what, how much, quality)
    Source document: receiving report

    Copyright 2015 Pearson Education, Inc.


    13-6
    Receiving Goods or Services

    Threats Controls
    1. Accepting unordered items 1 a. Authorized purchase orders
    2. Mistakes in counting needed before receiving
    3. Verifying receipt of services goods
    4. Inventory theft 2 a. Bar codes or RFID
    3 a. Budget controls and audits
    4 a. Restrict physical access to
    inventory
    b. Document all inventory
    transfers
    c. Segregate custody vs.
    Copyright 2015 Pearson Education, Inc. receiving of inventory 13-7
    Approve Supplier Invoice and Cash
    Disbursements
    Match the supplier invoice to:
    Purchase order
    Receiving report
    supplier invoice + purchase order + receiving report = voucher

    Approve supplier invoice for payment


    Source document: disbursement voucher
    Pay vendor

    Copyright 2015 Pearson Education, Inc.


    13-8
    Approve Supplier Invoice

    Threats Control
    1. Errors in supplier invoice 1 a. Verify invoice accuracy
    2. Mistakes in posting to 2 a. Data entry edit controls
    accounts payable b. Reconcile detailed accounts
    payable records to the
    general ledger accounts
    payable account

    Copyright 2015 Pearson Education, Inc. 13-9


    Cash Disbursements
    Threats Controls
    1. Failure to take discounts 1 a. File invoices by due date to
    2. Pay for items not received take advantage of discounts
    3. Duplicate payments 2 a. Match supplier invoice to
    4. Theft of cash supporting documents
    (purchase order, receiving
    5. Check alteration
    report)
    6. Cash flow problems
    3 a. Pay only original invoices
    b. Cancel supporting document
    when payment is made
    4 a. Physical security of checks
    b. Separation of duties
    c. Reconcile bank accounts
    5 a. Check Protection machines
    Copyright 2015 Pearson Education, Inc. 6 a. Cash flow budget 13-10
    Key Terms

    Expenditure cycle Vendor-managed inventory


    Economic order quantity Kickbacks
    (EOQ) Receiving report
    Reorder point Debit memo
    Materials requirement Voucher package
    planning (MRP) Nonvoucher system
    Just-in-time (JIT) inventory Voucher system
    system Disbursement voucher
    Purchase requisition Evaluated receipt settlement
    Purchase order (ERS)
    Blanket purchase order Procurement card
    Imprest fund
    Copyright 2015 Pearson Education, Inc. 13-11

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