Expenditure Cycle Flashcards
1
Q
Inaccurate inventory records
A
- Perpetual inventory system
- Bar codes and RFID
- Periodic physical counts with reconciliation
2
Q
Purchase items not needed
A
- Perpetual inventory system
- EOQ, MRP, JIT systems
- Approval of requisitions
- Centralized purchasing function
3
Q
Inflated prices
A
- Price lists
- Competitive bidding
- Review and approval of POs
- Budget and comparison of actual to budgets
4
Q
Inferior/poor quality
A
- Pre-approved suppliers only
- New supplier audit and approval
- Responsibility for scrap or rework
- Quality surveillance and reporting
5
Q
Unreliable suppliers
A
- Supplier quality certifications (e.g. ISO9000)
- Audit and monitor supplier performance
6
Q
Unauthorized suppliers
A
- Application control to prevent unauthorized
- New supplier audit and approval
7
Q
Kickbacks
A
- Policy, training, signed statements, personal disclosure
- Job rotation and mandatory vacations
- Supplier audits to validate PO
8
Q
Accepting unordered items
A
- Compare to PO
9
Q
Counting errors
A
- Do not disclose expected quantity
- Bar codes and RFID
- Transfers are re-counted and documented
- Application controls report discrepancies
10
Q
Verifying receipt of services
A
- Document receipt with signature
- Budget controls and audits
11
Q
Theft of inventory
A
- Physical access controls
- Document transfers
- Perpetual inventory system
- Physical count of inventory and reconciliation
- Segregation of duties
12
Q
Errors in Supplier invoices, paying for items not received
A
- Compare invoice to PO and receiving report
- Check math
13
Q
Fictitious vendors/suppliers
A
- Approve new vendors
- Restrict access to vendor master file
- Document receipt of goods/services
14
Q
Accounts Payable posting errors
A
- Data entry edit controls
- Reconcile AP subsidiary ledger detail to General Ledger
15
Q
Pay for items not received
A
- Three way match or ERS
- Check signer reviews voucher package
- Receipts for all expense reports, petty cash, etc
