Accounting Information Systems: The Processes and Controls, 2nd Edition

SUMMARY OF STUDY OBJECTIVES

An introduction to expenditure processes. There are five typical types of processes related to expenditures. The three that are covered in this chapter are purchasing processes, purchase return processes, and cash disbursement processes.

Purchasing processes and the related risks and controls. Purchasing processes include obtaining a purchase requisition; comparison of the requisition with stock levels; authorizing the purchase request; selecting the vendor; preparing a purchase order; receiving goods at the receiving department; counting, inspecting, and preparing a receiving order for goods received; and updating accounts payable, inventory, and general ledger records. Purchasing process controls can be categorized into authorization, segregation, adequate records, security of assets and records, and independent checks.

Purchase return processes and the related risks and controls. Purchase return processes include rejecting goods already received, matching goods to be returned to the original purchase order, preparing a debit memorandum; receiving credit and/or check from the vendor, and updating accounts payable, inventory, and general ledger records. Purchase return process controls can be categorized into authorization, segregation, adequate records, security of assets and records, and independent checks.

Cash disbursement processes and the related risks and controls. Cash disbursement processes include determining which invoices are due; matching ...