Expenditure Cycle

Question 1

What are inherent risks?

Answer 1

• Capitalize or expense it??? (Biggest concern)

- Do we have unrecorded obligations???

Question 2

Who are the key stakeholders?

Answer 2

• Providers

- Inbound logistic providers

Question 3

What are important forms?

Answer 3

1) Check or e-chcks
2) EFT (EFT)
3) Purchase order or requisition
4) Vendor invoices
5) Voucher or voucher package (purchase order, receiving report)
6) Open purchase orders
7) Receiving report (what was the condition, quantity)
8) A/P balances- who do we owe, what do we owe

Question 4

What are accounting / business risk?

Answer 4

• Request and authorize purchase
• Cash through vendor frauds perpetrate within the organization
• Require formal process for purchasing, unauthorized purchase of cloud computing
• Integrated ERP should track all orders and receipts
• Acquire goods at market prices not inflated of high quality, from authorized suppliers, no kickbacks to ensure that they are buying from those suppliers (the nature of gifts to purchasing agents)
• Periodic review of purchase and purchase orders
• Take custody go goods (receiving unordered or defective goods, errors or omissions)
• Separation of duties in receipt of goods
• Automate receiving system (bar code or RFID scan)
• Automated matching monitoring of purchase orders
• Pay for goods, errors in vendor invoices in their favor
• Paying the same invoice multiple times
• Paying for goods not received
• Recording or posting goods

Question 5

What are good controls?

Answer 5

• Matching of items received to vendor invoices and monitoring of costs compared to expected costs
• Using voucher system to authorize payment of invoices that are tracked through inspection process