Chapter
1
Chapter 12
The Purchasing/
Introduction
to
Accounting
Information
Accounts Payable/
Systems
Cash Disbursement
(P/AP/CD) Process
1
Learning Objectives
• Know definitions/basic functions of P/AP/CD
• Relationship between P/AP/CD &
environment
• Logical/physical characteristics of P/AP/CD
• Special requirements of payroll process
• Technology to implement P/AP/CD
• System control goals and plans for P/AP/CD
Expenditure cycle (merchandising)
P/AP/
CD process
Expenditure
General
ledger
Cycle
Inventory
process
Payroll
3
Vertical perspective - P/AP/CD
VP
Finance
VP
Logistics
Treasurer
Cashier
Controller
Supervisor,
payroll
Supervisor,
accounts payable
Warehouse
manager
Supervisor,
receiving
Purchasing
manager
Buyers
Horizontal information flows
4
5
Horizontal Information Flows
• Purchase requisition from inventory control to
purchasing
• Requisitions from other depts. to purchasing
• Purchase order to vendor
• PO notification to other depts. or inventory
• PO notification to receiving
• PO notification to accounts payable
• Goods/services received from vendor
6
Horizontal Information Flows (2)
•
•
•
•
•
•
•
•
Receiving notification to accounts payable
Receiving notification to purchasing
Invoice received from vendor
Approved voucher to cashier
AP notification & inventory cost info to GL
Check to vendor by cashier
Paid voucher to accounts payable
Notification of cash disbursement to GL
7
Inventory
process
Notification
Purchase
requisition
Various
depts.
1.0
Order
goods
& services
Vendor master data
Employee
time
record
GL inventory
rec'd update
Inventory
master data
Vendor
invoice
General
Ledger
System
3.0
Establish
payable
Vendor
payment
GL cash
disbursement
update
Disbursement event
data
PO master data
PO
receiving
notification
GL payable
update
Vendor
Vendor
Vendor
acknowledgement
PO
notification
PO accounts
payable
notification
General
Ledger
Purchase
order
Inventory master
Inventory's
purchase
requisition
Receiving
report
Receiving reports
2.0
Receive
goods
& services
Inventory master data
Vendor
packing
slip
Stock
notice
Carrier
Payroll data
AP Master data
4.0
Make
payment
Warehouse
Employee
Employee
payment
Vendor master data
8
9
ER diagram - P/AP/CD
10
11
12
13
14
Control Goals of the Business Process
Control Goals of the
Operations Process
Control Goals of the Information Process
Purchasing Subsystem Receiving Subsystem
Recommended
Control Plans
Ensure effectiveness
Ensure
of operations by
Ensure For purchase For purchase
efficient
achieving the following
security
requisition
order master
employprocess goals
of
ment of
Inputs, ensure: data, ensure
resources resources
A B C D
P-5: Independent authorization
to make payment
P-6: Independent validation
of vendor invoice
P-7: Vendor invoice math
accuracy check
For P.O.
master data,
ensure
IV IC IA UC UA IV IC IA UC UA
P-1
P-1: Requisition audit data
P-2: Authorized vendor data P-2
P-3: Requisition confirmation
to originating department
P-4: Approve vendor selection P-4
For vendor
packing slip
inputs,ensure:
P-2
P-2
P-3
P-4
P-5
P-6
Key: possible system goals:
A – Select vendor – best quality, lowest price by promised delivery data
B – Ensure that right goods in acceptable condition received
C – Optimize cash discounts
D – Ensure sufficient but not excessive cash
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy 15
Control Goals of the Business Process (Continued)
Control Goals of the
Operations Process
Control Goals of the Information Process
Payables Subsystem CD Subsystem
Recommended
Control Plans
Ensure effectiveness
Ensure
of operations by
Ensure
For vendor
For accounts For payment
For A/P
efficient
achieving the following
security invoice inputs, payable master voucher inputs, master data,
employprocess goals
of
ment of
ensure:
data, ensure:
ensure:
ensure
resources resources
A B C
D
IV IC IA UC
UA
IV IC IA UC
P-1: Requisition audit data
P-2: Authorized vendor data
P-3: Requisition confirmation
to originating department
P-4: Approve vendor selection
P-5: Independent authorization
to make payment
P-6: Independent validation
of vendor invoice
P-7: Vendor invoice math
accuracy check
P-5
P-5
P-6
P-6
Key: possible system goals:
A – Select vendor – best quality, lowest price by promised delivery data
B – Ensure that right goods in acceptable condition received
C – Optimize cash discounts
D – Ensure sufficient but not excessive cash
P-7
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy
16
UA
Learning Objectives
• Know definitions/basic functions of P/AP/CD
• Relationship between P/AP/CD &
environment
• Logical/physical characteristics of P/AP/CD
• Special requirements of payroll process
• Technology to implement P/AP/CD
• System control goals and plans for P/AP/CD