3.07 - OPERATING CYCLES: SPENDING CYCLE Flashcards
3.07 - OPERATING CYCLES: SPENDING CYCLE
In a well-designed internal control structure, the same employee may be permitted to
A) Mail signed checks, and also cancel supporting documents.
B) Mail signed checks, and also prepare bank reconciliations.
C) Approve vouchers for payment, and also have access to unused purchase orders.
D) Prepare receiving reports, and also approve purchase orders
A) Mail signed checks, and also cancel supporting documents.
The employee who mails checks could also have the responsibility to cancel the supporting documentation to ensure there are no duplicate payments.
The employee who prepares receiving reports has custody responsibilities and should not have
authorization duties.
The employee who approves vouchers for payment is responsible for authorization and should not have access to purchase orders, which is indirectly custody of assets.
The employee who mails signed checks has custody of assets and should not be responsible for reconciliation
3.07 - OPERATING CYCLES: SPENDING CYCLE
Which of the following internal control procedures is not usually performed in the treasurer’s department?
A) Approving vendors’ invoices for payment.
B) Canceling payment vouchers when paid.
C) Controlling the mailing of checks to vendors.
D) Verifying the accuracy of checks and vouchers.
A) Approving vendors’ invoices for payment.
The treasurer is not responsible for the approval of vendor invoices for payment.
The approval of payment on an invoice should be granted to a responsible party in the accounts payable department who matches the purchase order, receiving report and vendors invoices together, which then gives the treasurer the authorization to pay the invoice.
The treasurer is responsible for verifying the accuracy of checks and vouchers, mailing checks to vendors, and canceling payment vouchers when paid.
3.07 - OPERATING CYCLES: SPENDING CYCLE
Which of the following internal control procedures is not usually performed in the treasurer’s department?
A) Canceling payment vouchers when paid.
B) Verifying the accuracy of checks and vouchers.
C) Approving vendors’ invoices for payment.
D) Controlling the mailing of checks to vendors.
C) Approving vendors’ invoices for payment.
The approval of payment on an invoice should be granted to a responsible party in the accounts payable department who matches the purchase order, receiving report and vendors invoices together, which then gives the treasurer the authorization to pay the invoice.
The treasurer is responsible for verifying the accuracy of checks and vouchers, mailing checks to vendors, and canceling payment vouchers when paid.
