Account Payable System Introduction Customer order some item which is inputted into the order file.

In the order file order detail is inputted. Then verify that theorder is valid. If order is valid then It is inputted into the pendingorder file. Then this pending order file is assembled requisition to purchase department.In this process venders address and its details are alsoincluded. Then purchase department is said that the order isassembled to which vender. Then it will give to then it will give tothe purchase order details files. After that it verify the currentshipment. Then it give note to the purchase department. Theaccuracy of invoice. If it is accepted then it will give to the account prepare a vender product. Then venders payable cheque is inputtedto purchase department. Definition of System An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payableentry is found on a balance sheet under the heading currentliabilities.Accounts payable are often referred to as "payables". Another common usage of Account payable refers to a business departmentor division that is responsible for making payments owed by thecompany to suppliers and other creditors. Need of a computerized system A s s u m i n g t h a t e x i s t i n g s y s t e m i s m a n u a l . T h e e x i s t i n g s y s t e m maintains all the records manually. The existing system contains large number of errors due to manual system. t the integrity of a system.

Authentication is used to implement a security layer between users and the system. A u t h e n t i c a t i o n i s a l s o u s e f u l t o t r a c k u s e r t r a i l s , i . e . t o k n o w w h a t action was performed by which user and when.

Feasibility study A feasibility study is undertaken to determine the possibilityor probability of either improving the existing system or developing a completely new system.It helps to obtain an overview of the problem and to getrough assessment of whether feasible solution exists.This is essential to avoid committing large resources to a project and then repent on it later.

There are three aspects in feasibility study portion of the preliminary investigation. 1)Technical feasibility2)Economic feasibility and3)Operational feasibility (1) TechnicalFeasibility: Technical Feasibility determines whether the work for the project b e d o n e w i t h t h e p r e s e n t e q u i p m e n t , c u r r e n t p r o c e d u r e s , e x i s t i n g softwares technology and available personnel? If new technology is needed then what alternatives will be neededin the present structure and work ethos? This will require a close examination of the present system. The technical feasibility should ask questions related to:

1)Adequacy of available technology 2 ) Adequacy of hardware. 3)Available of computer. 4 )Operating time and support facilities, etc. Technical feasibility determines whether the technology needed for the proposed system is available and how it can be integrated within theVehicle Registration And Insurance System . Technical evaluation musta l s o a s s e s s w h e t h e r t h e e x i s t i n g s y s t e m c a n b e u p g r a d e d t o u s e t h e n e w technology and whether the Vehicle Registration And Insurance System has the expertise to use it T h e t e c h n i c a l f e a s i b i l i t y i n t h e p r o p o s e d s y s t e m d e a l s w i t h t h e technology used in the system. It deals with the hardware and software usedin the system whether they are of latest technology or not. It happens thatafter a system is prepared a new technology arises and the user wants thesystem based on that technology. Thus it is important to check the system to be technically feasible.

Economic feasibility :E c o n o m i c f e a s i b i l i t y l o o k s a t t h e f i n a n c i a l a s p e c t s o f t h e p r o j e c t . Economic feasibility concerns with the returns from the investments in a project. It determines whether it is worthwhile to invest the money in the proposed system. It is not worthwhile spending a lot of money on a projectfor no returns.To carry out an economic feasibility for a system, it is necessary to p l a c e a c t u a l m o n e y v a l u e a g a i n s t a n y p u r c h a s e s o r a c t i v i t i e s n e e d e d t o implement the project.The Vehicle Registration And Insurance System plans to acquire then e c e s s a r y h a r d w a r e a n d s o f t w a r e r e q u i r e f o r t h e s y s t e m a n d t h e r e i s n o hindrance whether economical or otherwise towards its purchase. A brief d e s c r i p t i o n o f t h e h a r d w a r e a n d s o f t w a r e r e q u i r e d i n t h e s y s t e m i s g i v e n later in the report (3)Operationalfeasibility: Operational feasibility covers two aspects. One is the technical performance aspect and other is the acceptance within the VehicleRegistration And Insurance System . Operational feasibility determines howthe proposed system will fit in the current operations and what, if any job restructuring and retraining may be needed to implement the system.In the system operational feasibility checks, whether the user wh o isgoing to use the system is able to work with the softwares with which the system is coded and also the mind of the user going to use the system. If they does not understand or is able to work on the system further development is of waste

Advantage of System Structured: Ensures uniform wording of questions to all respondents. Easy to administer and evaluate.

Less interview training required. Result in shorter time.

(2) Unstructured: Questions can be worded to suit the respondent. May produce the information about the areas overlooked or notthought to be important.

Disadvantage of System (1)Structured: Cost of preparation is high. Such high level of structure may not always be suitable.

Some respondent may resist to such structure. (2)Unstructured: Inefficient use of interviewer and respondent time. Results take a longer time.

Extra time required for the collection of essential facts. The success of the interview depends on the skill of theinterviewer and his/her preparation for the interview

MANAGEMENT OBJECTIVE The process should maximize profitable cash flow and contain controls that will ensure that transactions are properly recorded and reported. BACKGROUND Accounts Payable is part of the expenditure cycle. The expenditure cycle is a subsystem of the both the cash management system and the accounting system. The other parts of the expenditure cycle are purchasing, receiving, and warehousing. Each of these subsystems should have controls to ensure that its overall objective will be met. In government, the budgeting process reflects legislated controls over disbursements. The use of the encumbrance booking entry reflects these controls. DEFINITIONS "Accounts Payable" is used in accrual-based accounting to record debts that have been incurred but not yet paid. Accounts payable are obligations (debt, liabilities) that will be settled at a future time. They are considered "current liabilities," which means that the debt will be settled with current assets during the current operating cycle. An encumbrance system is a control used in most governmental units to ensure that budgets are not overspent. GASB Cod. sec. 1600.123 defines encumbrances as "commitments related to unperformed (executory) contracts for goods or services." When a purchase order or commitment is placed, the entity reducesthe amount of budgetary authority remaining, and records an outstanding encumbrance. When the goods or services have been received, the encumbrance balance is reduced and an expenditure or a liability is recorded. OVERVIEW OF THE PROCESS The basic phases of an accounts payable process are: Ensure that the process provides for an analysis of accounts payable. Establish policies and procedures for the authority to commit funds and segregate duties while maintaining maximum efficiency. Optimize the use of cash by coordinating with receivables, investments, purchasing, and other departments to maximize profitable cash flow and disbursement float. Ensure that the system properly records and reports payables. Monitor and reevaluate the system. PROCEDURES Suggested procedures, organized according to the elements of a finding, are listed below. They should be expanded or tailored to fit the specific entity being reviewed. Note: The following procedures and the process described above are normative, rather than prescriptive. That is, they represent "average" or baseline thinking since they assemble information which repeatedly appeared in the various resources used to prepare this module. Do not be too hasty or literal in applying a given criterion or procedural step to a specific entity. While omissions or variations may be obvious, judgment must still be used to determine whether such omissions or variations are

material. Review criteria: General criteria applicable to the accounts payable process are as follows:

General criteria Accounts payable has four objectives: 1. provide reliable data to management 2. ensure efficient and effective management of disbursements to maximize disbursement float 3. minimize unnecessary or premature expenditures 4. ensure the accurate recording and reporting of payables Generally, a good disbursement system will minimize the amount of cash on hand and make sure that all assets are working for the entity. Specific criteria The criteria related to the basic phases of the performance appraisal Assess Condition: Determine the actualprocesses used Conduct interviews, observe operations, and identify and collect available documentation in order to gain an understanding of the entity's actual accounts payable process and controls. Included in the actual process are both official/formal and unofficial/informal processes and controls. A process may exist even if it is not documented. Possible procedures include, but are not limited to: Determine how the entity plans for accounts payable system and the relationship of its procedures and policies to other parts of theaccounting and cash management system. Determine that accounts payable gathers data for regular analysis of disbursement float, disbursement account balances, discounts on invoice payments, etc. Determine if the process used by the entity to analyze purchase needs is adequate and maximizes cash flow. Obtain information that demonstrates reports that analyze the performance of the accounts payable process, if available. Interview employees and management to determine how these reports are used. Obtain subsystem information that indicates that the controls and procedures over accounts payable are reasonable and are reviewed for cost/benefit. Determine where the accounts payable process resides in the entity, who participates in the process, and how the participants are selected. Obtain and review any manuals, policies, and forms that could document any phase of the accounts payable process, including its relationship to entity goals, objectives, strategies, and plans. Determine if and how management consciously selects and employs the assumptions, criteria, methods, processes, and techniques used in the accounts payable process. Obtain and review available documentation on the assessment of risks, costs, and benefits. In addition to gaining an understanding of the actual process, also try to find out: how the participants view the actual process what parts of the process they see as successful or unsuccessful, and why what they think is important about the process, and whyThis information may help identify causes and barriers.Analytic procedures are "evaluations of financial information made by a study of plausible relationships from among both financial and nonfinancial data." (SAS 56).

Relationships that may be significant with respect to payables include: Compute ratios such as accounts payable divided by purchases, or accounts payable divided by total liabilities. Compare with ratios from prior years and investigate significant changes. Compare over time how long it takes between receiving an invoice and making a payment. A significant change should be explained.Consider payables in relation to purchasing volume -there should be a direct relationship.

Determine the strengths and weaknesses of the actual process Using the tailored criteria, the understanding of the entity's process gained above, and the procedures in this section, analyze the actual process to determine if it: is designed to accomplish the management objective has controls that provide reasonable assurance that the process will workas intended is implemented and functioning as designed

is actually achieving the desired management objective(s) Suggested procedures for each of these four analysis steps are detailed below. In executing these procedures, remember to identify and analyze strengths and weaknesses. Identify and review the steps in the actual process to determine if the process is designed to accomplish the management objective(s). Possible procedures include, but are not limited to: Determine if all major steps in the criteria are included in the actual process. If steps are missing, determine if their absence is likely to have a materially negative effect on the accounts payable process at the entity you are reviewing. Determine if all the steps in the process appear to add value. If there are steps that do not appear to add value, try to get additional information on why they are included in the process. Review the order of the steps in the process to determine if it promotes productivity. Review the level of technology used in the process to determine if it is up-to-date and appropriate to the task. Besides computer, electronic,

INTRODUCTION OF ACCOUNTS PAYABLE Accounts payable, also known as Creditors, is money owed by a business to its suppliers and shown on its Balance Sheet as a liability. An accounts payable is recorded in the Account Payable sub-ledger at the time an invoice is vouchered for payment. Vouchered, or vouched, means that an invoice is approved for payment and has been recorded in the General Ledger or AP subledger as an outstanding,or open, liability because it has not been paid. Payables are often categorized as Trade Payables, payables for the purchase of physical goods that are recorded in Inventory, and Expense Payables, payables for the purchase of goods or services that are expensed. Common examples of Expense Payables are advertising, travel, entertainment, office supplies and utilities. A/P is a form of credit that suppliers offer to their customers by allowing them to pay for a product or service after it has already been received. Suppliers offer various payment terms for an invoice. Payment terms may include the offer of a cash discount for paying an invoice within a defined number of days. For example, 2%,30 Net 31 terms mean that the payor will deduct 2% from the invoice if payment is made within 30 days. If the payment is made on Day 31 then the full amount is paid. In households, accounts payable are ordinarily bills from the electric company, telephone company, cable television or satellite dish service, newspaper subscription, and other such regular services. Householders usually track and pay on a monthly basis by hand using cheques, credit cards or internet banking. In a business, there is usually a much broader range of services in the A/P file, and accountants or bookkeepers usually use accounting software to track the flow of money into this liability account when they receive invoices and out of it when they make payments. Increasingly, large firms are using specialized Accounts Payable automation solutions (commonly called ePayables) to automate the paper and manual elements of processing an organization's invoices. Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which describes a cash conversion cycle, a period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer. When the invoice is received by the purchaser it is matched to the packing slip and purchase order, and if all is in order, the invoice is paid. This is referred to as the three-way match. The three-way match can slow down the payment process, so the method may be modified. For example, three-way matching may be limited solely to large-value invoices, or the matching is automatically approved if the received quantity is within a certain percentage of the amount authorized in the purchase order

Accounts Payable Processes A. Overview Accounts Payable staff process all non-payroll disbursements through the Oracle Accounts Payable application, including purchase order payments, invoice payment forms, travel and other employee reimbursements and stipend payments made to graduate research assistants. In addition, Accounts Payable staff prepare and distribute 1099 forms to individuals receiving payments from RIT for services. Objectives: how payments are processed for items purchased on an RIT purchase order how to request payments for non-purchase order purchases how payments to independent contractors are processed how to process reimbursements to RIT employees how to process stipend payments to graduate research assistants Procurement card processes when checks are produced in Accounts Payable B. Purchase Order Payments 1. Purchases for all goods over $1,500 are made through the Purchasing Department by creating an on-line requisition in the Oracle Purchasing application. a. Digital Den, Dining Services and Wallace Memorial Library have special purchasing arrangements to purchase commodity items for use in their business operations. 2. Purchases for services over $5,000 require three competitive quotes and must be made through the RIT Purchasing Department using a purchase order 3. When a supplier invoice is received in Accounts Payable, staff enter the information into the Oracle Accounts Payable application for payment. a. If the goods have been received and the quantity and price match the purchase order, Accounts Payable will approve the invoice and pay according to the supplier terms. b. If the invoice does not match the purchase order, it will be placed on invoice hold. i. For example, if the items have not been received through RIT Central Receiving, the invoice will be placed on hold. ii. An e-mail alert will be sent automatically to the requestor asking him/her to notify Central Receiving if the goods have been received. iii. Once Central Receiving updates the Oracle Purchasing application with the receiving information, the hold will be removed automatically and the invoice will be approved for payment. .

C. Invoice Payment Forms 1. Invoice Payment Forms are used to request payments for goods and services not purchased on a purchase order. 2. When an Invoice Payment Form is received in Accounts Payable, an authorized signature form must be on file for the approver, the business purpose field must be completed in full and supporting information such as an original supplier invoice must accompany the form. a. Accounts Payable staff enter the information into the Oracle Accounts Payable application and approve for payment. b. The payment is transferred to the general ledger and posted when it is approved, not when it is paid. D. Petty Cash 1. Petty Cash Forms may be used to reimburse employees for small dollar purchases of $50.00 or less. 2. Completed Petty Cash Forms, with original receipts and the appropriate departmental approvals, are taken to the Cashiers window in the Student Financial Services Office for processing. Note: employees requesting reimbursement must present identification to the Cashier. 3. Accounting staff enter the account number and reimbursement amount into the Oracle general ledger each day. E. Encumbrance 1. An encumbrance is a type of journal entry generated to record anticipated expenditures. 2. Encumbrance entries for purchasing transactions (requisitions and purchase orders) or accounts payable transactions (invoice payment forms) are created and reversed automatically in the Oracle General Ledger application. 3. There are three encumbrance types: a. A commitment encumbrance is created automatically when a purchase requisition is approved in the Oracle Purchasing application. The entry is reversed when the requisition becomes a purchase order. b. An obligation encumbrance is generated automatically when a purchase order is approved in the Oracle Purchasing application. The entry is reversed when the purchase order is matched to the invoice or when the order is cancelled. c. An invoices encumbrance is generated automatically when an invoice is matched to a purchase order. The entry is reversed when the invoice is approved for payment. F. Payments to Independent Contractors 1. An individual must meet certain guidelines established by the IRS to be considered independent contractor. 2. To process payments to independent contractors engaged for less than $5,000, the department sends a signed contract and a completed Form W-9 along with an Invoice Payment Form to Accounts Payable 3. When engaging an independent contractor for services costing $5,000 or more, the department creates a purchase requisition and sends a signed contract and a completed Form W-9 to the Purchasing Department for processing. a. When services are rendered and an invoice is received from the independent contractor, the department approves it for payment and sends it to Accounts Payable for processing.

4. Accounts Payable staff prepares Form 1099s for all individuals who receive $600 or more in compensation for services during a calendar year. 5. All services performed by RIT employees acting as independent contractors are processed through the bi-weekly or semi-monthly payroll process, not through the accounts payable process. a. When an RIT employee provides additional services to RIT, the department completes an Additional Payment Form. The payment is subject to tax withholdings at the employees regular withholding rate G. Employee Travel Advances and Reimbursements 1. RIT employees who travel may be entitled to receive a travel advance prior to departing for their trip. NTID employees obtain cash advances using a Citibank government travel card. a. Advances of up to $50.00 per day may be requested on an Invoice Payment Form and directed to Accounting (GEM, 6 floor) for processing. b. Checks for travel advances are sent to the Cashiers Window to be picked up by the employee. c. Employees account for the advance on a Travel Expense Report upon the completion of the trip. d. Excess funds are returned to RIT. i. Complete a Deposit ID Form and take it along with the amount due to RIT (either cash or a check) to the Cashiers Window. 2. Employees are required to complete a Travel Expense Report for business travel when they have obtained a travel advance, or when airfare or an overnight stay is part of the trip. a. Employees who travel should send an approved Travel Expense Report, with original receipts, to Accounting within 5 days of the completion of the trip. b. Accounts Payable staff review Travel Expense Reports and process reimbursements, usually within 5 business days of receipt, provided that all documentation accompanies the Travel Expense Report. c. Reimbursement checks are mailed to the employees home. 3. Miscellaneous employee reimbursements of $50.00 or more are processed through Accounts Payable using an Invoice Payment Form. 4. Miscellaneous reimbursements for mileage and out-of-pocket expenses totaling less than $50.00 may be processed through petty cash. H. Payments to Graduate Research Assistants 1. Graduate Research Assistants (GRAs) conduct original, professional-level research primarily for the purpose of fulfilling the requirements for an advanced degree (i.e., the research is related to the students field of study). 2. GRAs receive a predetermined stipend over the term of their appointment, typically one academic year. The stipend amount is based on the GRAs appointment/level of effort (hours devoted to their research up to a maximum of 20 hours per week) and classification. 3. The stipend payment is processed via accounts payable. . I. Accounts Payable Check Processing Schedule 1. Accounts Payable staff processes payments to suppliers each Monday and Wednesday evening; checks are mailed on Tuesdays and Thursdays.
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2. Payments for employee travel advances, reimbursements and student refunds are processed daily. Introduction to Accounting at Rochester Institute of Technology: RIT Accounting Practices, Procedures and Protocol Chapter VII: Accounts Payable Processes Revised September 1, 2008 5 a. Reimbursement checks are mailed to employees homes. b. Advances and student refunds are picked up by employees at the Cashiers Window (Bursars Office). J. Procurement Card Processes 1. RIT faculty and staff employees may apply for an RIT VISA procurement card, with departmental approval. 2. Use of the procurement card streamlines the procurement process for cardholders and it should be used for all purchases less than $1,500 (travel expenses may not be charged to the procurement card). 3. For internal billing purposes, an RIT 24-digit general ledger account number is linked to each VISA card. 4. Purchase transactions are available for all cardholders to review daily through the banks Internet reporting system. a. Authorized cardholders may have access to the banks Internet reporting system to make account number changes before the information is moved to the ledger. b. Throughout the month, Accounting transfers the information into the Oracle General Ledger application. c. The banks Internet reporting system also provides cardholders with daily transaction information to help them keep track of their departmental budgets. 5. Cardholders receive a monthly statement from the bank that summarizes transactions for the period. a. Cardholders must attach original receipts to the statement, indicate the business purpose for each purchase, obtain their department heads approval, and forward to Accounting. b. Accounting reviews all documentation and files the statements for audit purposes. 6. RIT pays the bank directly for all purchases once per month.

A TERM PAPER ON MANAGEMENT IN ACCOUNT PAYABLE

SUBMITTED BY:SUSHMITA DEY ROLL NO 21