Bài giảng Romney_ais13 - Chapter 13: The Expenditure Cycle: Purchasing to Cash Disbursements

The Expenditure Cycle: Purchasing to Cash DisbursementsChapter 1313-1Learning ObjectivesExplain 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.13-2Basic Expenditure Cycle ActivitiesOrder materials, supplies, and servicesReceive materials, supplies, and servicesApprove supplier (vendor) invoiceCash disbursement13-3Order Goods (Materials/Supplies) or Services Processing StepsIdentify what, when, and how much to purchaseSource document: purchase requisitionChoose a supplierSource document: purchase order13-4Ordering Goods/ServicesThreats ControlsStockouts and excess inventoryPurchasing items not neededPurchasing items at inflated pricesPurchasing goods of poor qualityUnreliable suppliersPurchasing from unauthorized suppliersKickbacks1 a. Perpetual inventory system b. Bar-coding, RFID2 a. Review and approval of purchase requisitions3 a. Price lists b. Competitive bids4 a. Use approved suppliers5 a. Monitor supplier performance b. Require quality certification6 a. Purchase from approved suppliers7 a. Supplier audits b. Prohibit gifts13-5Receiving ProcessGoods arrive Verify goods ordered against the purchase order (what, how much, quality)Source document: receiving report13-6Receiving Goods or ServicesThreatsControlsAccepting unordered itemsMistakes in countingVerifying receipt of servicesInventory theft1 a. Authorized purchase orders needed before receiving goods2 a. Bar codes or RFID3 a. Budget controls and audits4 a. Restrict physical access to inventory b. Document all inventory transfers c. Segregate custody vs. receiving of inventory13-7Approve Supplier Invoice and Cash DisbursementsMatch the supplier invoice to:Purchase orderReceiving reportsupplier invoice + purchase order + receiving report = voucherApprove supplier invoice for payment Source document: disbursement voucherPay vendor13-8Approve Supplier Invoice ThreatsControlErrors in supplier invoiceMistakes in posting to accounts payable1 a. Verify invoice accuracy2 a. Data entry edit controls b. Reconcile detailed accounts payable records to the general ledger accounts payable account13-9Cash DisbursementsThreatsControlsFailure to take discountsPay for items not receivedDuplicate paymentsTheft of cashCheck alterationCash flow problems1 a. File invoices by due date to take advantage of discounts2 a. Match supplier invoice to supporting documents (purchase order, receiving report)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 6 a. Cash flow budget13-10Key TermsExpenditure cycleEconomic order quantity (EOQ)Reorder pointMaterials requirement planning (MRP)Just-in-time (JIT) inventory systemPurchase requisitionPurchase orderBlanket purchase orderVendor-managed inventoryKickbacksReceiving reportDebit memoVoucher packageNonvoucher systemVoucher systemDisbursement voucherEvaluated receipt settlement (ERS)Procurement cardImprest fund13-11