Client: PT.

Haier Electrical Appliances Indonesia Prepared by: AS Date: Nov 6, 2019

Period ended: October 31, 2019 Reviewed by:

Understand the Flows of Significant Classes of Transactions, including Walk-

through – Cash Disbursements

Objective

We should obtain a high-level understanding of the accounting process sufficient to enable us to identify and
understand major classes of transactions in the entity’s operation, how such transactions are initiated, significant
accounting records, supporting documents and accounts in the financial statements and the accounting and financial
reporting process, from the initiation of significant transactions and other events to their inclusion in the financial
statement and identify specific risks associated with the such accounting process necessary to develop appropriate
audit plan.

Related Accounts

Cash disbursements typically have a significant effect on the following accounts (modify account names as appropriate
and list other accounts not pre-populated below):

 Cash and Cash Equivalents  Accounts payable

 Expenses  Advances money
 Advance Payment

Principal Steps in the Cash Disbursements Flow of Transactions

Document below the job title(s) of the individual(s) responsible for each of the steps in the cash disbursements flow of
transactions. To help ensure that we properly consider the effects of computer processing in making our risk
assessments and developing our audit program, indicate those steps where computer processing is involved.

Also, for each principal business activity, describe the flow of transactions involved from the initiation of the transaction
to its inclusion in the next principal business activity or the financial statements.

1. Cash Disbursements for Direct Payment (Cash on Hand & Cash on Bank) :

Performed by: IT
Process Description (Job title only) Reliance
1 Filling the Logbook & Asking for Advance Voucher Requestor No
2 Complete the Advance Voucher & Prepared Special Requestor No
Approval Form
3 First signed (approval) for Advance Voucher Requestor Head Manager No
4 Received the Advance Voucher & Special Approval Form Finance (Puspa) No
5 Checking & Signed for Special Approval Form Finance (Puspa) No
6 Approval of Advance Voucher & Special Aproval Form Director (Nakase) No
7 Cash Out Finance (Puspa) No
8 Record a journal : Finance (Purpa) No

Advance Money XXX

Cash in Hand/Bank XXX
9 Checked & Approved Journal Voucher Finance (Puspa) & Manager No
(Sembiring)
10 Cash Disbursement journal summarized and posted to Accounting (Resna) Yes
General Ledger

Understand the Flows of Transactions Page 1/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

11 Prepared advance settlement form with supporting Requestor No

document
12 Advance settlement form signed Requestor Head Manager, Finance No
(Puspa), Finance Manager
(Sembiring)
13 Cash Disbursement Journal Finance (Puspa) No
Expense/Asset XXXX
Advance Money XXXX
14 Cash Disbursement journal summarized and posted to Accounting (Resna) Yes
General Ledger

Provide any other details that are necessary to understand the initiation, processing, and recording of cash
disbursements to inside group:

There are 2 types for Direct Payment : Advance Payment & Non Advance Payment.
a. Advance Payment is they give money first to the requestor and when the transaction occured or already
get service/goods, it will be settled.
b. Non Advance Payment is company already get goods/service but it haven’t paid yet, but not recorded as
payable because it will be settled on 1-2 days.

Advance Payment

1. Requestor ask for Advance Voucher to the cashier and filling the logbook (how much money needed and what
for)

2. Requestor completed the Advance Voucher and prepared Special Approval Form. The Special Approval Form
contained the amount of money needed and for what it will be used.

3. Advance Voucher & Special Approval Form should be approved by Requestor Head Manager.

4. Requestor give the Advance Voucher & Special Approval to Finance (Puspa) and then she will be checking the
Special Approval Form.

5. Advance Voucher & Special Approval Form should be approved by Director (Nakase). There are no regulation
of plafond approval, so all the transaction eventhough it small must be approved by Director (Nakase).

6. Finance (Puspa) give the money to the Requestor, it can be by Bank Transfer or Cash. Requestor will sign on
the logbook when receiving the money. The voucher wil be stamp “paid” by the Finance (Puspa)

7. Finance (Puspa) record a journal for the cash disbursement :

Advance Money XXXX
Cash on Bank/Hand XXXX

8. Voucher that has been record by Finance (Puspa) will be sign and put the date. And then she and Manager
(Serimbing) will checked and sign too.

9. Voucher that has been signed give to the accounting (Resna) for summarized and posting to the system.

10. After the event done, the requestor should prepare advance settlement form and attached the supporting
document (invoice, payment receipt, etc) and than give it to Finance (Puspa). Advanced Settlement Form
should be sign by Requestor Head Manager before give it to Finance (Puspa).

11. Finance (Puspa) will record journal :

Expense/Asset XXXX
Advance Money XXXX

Understand the Flows of Transactions Page 2/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

12. After record it, Advanced Settlement Form will be sign by Finance (Puspa) and manager (Sembiring).

13. Journal will be summarize and posting to General Ledger by Accounting (Resna). For the date that will post by
Accounting (Resna) is the date transaction that Cashier Record. And as a sign that Accounting (Resna) have
done posting to the system, accounting write code of transaction.

14. GL account that posted in General ledger for every transaction were different with last year due to changes in
accounting system

Non Advance Payment

15. For Non Advance Payment, the step is same as advance payment but the difference is the document. The
document used is Payment voucher, and when requestor submit the payment voucher to cashier (Avin), it
should be attached with original copy of supporting document (invoice, tax invoice, legal document etc).

16. For Direct Payment using bank transfer, approval just until Manager (Sembiring).

2. Cash Disbursements for Payment PO Transaction (Cash on Bank) :

Performed by: IT
Process Description (Job title only) Reliance
1 Prepare a payable voucher with supporting documents Purchasing Department /
(Invoice, Tax Invoice, Warehouse Document, etc) Engineering Department
2 Approve a payable voucher Purchasing Head Department /
Engineering Head Department
3 Receive a Payable Voucher and matching the invoice Accounting
received with inventory in
4 Preparing the journal: Accounting
Office equipment XXX
Account payable XXX
5 Approve a Payable Voucher and Payable Journal Accounting Manager
6 Posted the journal to general ledger Accounting
7 Preparing the payment voucher Purchasing Department / No
Engineering Department
8 Approve a payment voucher Purchasing Head Department / No
Engineering Head Department
9 Payment voucher signed by authorized Finance Manager (Mulya No
Sembiring)
10 Cash Out Finance (Puspa) Yes
11 Preparing the cash disbursement journal Finance (Puspa) No
Account Payable XXX
Bank XXX
12 Numbering the payment voucher Finance (Puspa) No
13 Receive the payment receipt and the payment voucher Finance (Puspa) No
with the code number
14 Posted to general ledger Accounting (Resna) Yes

Provide any other details that are necessary to understand the initiation, processing, and recording of cash
disbursements to inside group:

There are 2 type PO transaction : Payment for Material Purchase & Payment for Non Material Purchase. For local
purchase payment, the document just payment voucher & transfer receipt. For Import payment, the document are
PO, DO, Invoice, PIB etc .

1. Finance (Puspa) received payment voucher for payable from Accounting staff (Endah). The payment voucher is the
attachement of Payable Voucher which contained the information of purchasing like invoice, delivery & receiving,
due date payment, and amount of the payable.

Understand the Flows of Transactions Page 3/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

2. Finance (Puspa) record journal payment voucher manualy.

Account Payable XXX
Cash In Bank XXX

3. Finance (Puspa) input detail voucher payable to Bank Book (List of disbursement on Bank) in Excel. Then Cashier
make summary of the payment based on date payment and Supplier name. The summary will input on
SmartMaster (Application of bank transfer). On Bank Transfer system, there are proses for transfering :
4. Finance (Puspa) as the creator
5. Checked after creating by Finance (Puspa)
6. Checked by Finance (Puspa)
7. Approval by GM finance (Sam)
Approval must be from both of GM finance & Director, if just one of them it can’t be process. On the system,
approver can’t give approval at the same time.

8. Payment voucher should be signed by Finance (Puspa) & Manager (Sembiring) and stamp it “Paid”.

9. Printed transfer receipt and attached it on Payment Voucher.

10. Payment voucher give to Accounting Staff (Resna) to post it to General Legder on the system. After post it,
Accounting Staff (Resna) write number account as a sign that the payment voucher have been posted.

11. GL account that posted in General ledger for every transaction were different with last year due to changes in
accounting system

Understand the Flows of Transactions Page 4/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

Critical Risks Related to the Process

Inherent Risk Considerations

The following factors should be considered in our assessment of inherent risk for the significant accounts affected by
this accounting process. “Yes” responses generally would support a lower inherent risk assessment for the significant
accounts affected. Conversely, “No” responses generally would indicate a higher inherent risk assessment for these
accounts.

Yes No
Are cash disbursement transactions relatively non-complex and/or homogenous in √
nature?
Is the volume of activity low and consistent with the prior year? √
Are payments made only by bank cheque and bank transfer? √
Are cash disbursements processed and recorded at a single location? √
Has our prior experience with the client been favourable in this area (e.g., few errors or √
adjustments in the significant accounts affected by this application)?

What Could Go Wrong (WCGW)

Document below the identified risks related to the process and the corresponding accounts and management
assertions affected.

Account and Assertions Affected

Risk
Balance Sheet Income Statement
1 Check/bank transfer amount differ from payment voucher Accounts Payable: E;
Cash: E
2 Disbursements/transfers are recorded in the wrong period Accounts Payable: E,C; Expense: O,C
Cash: E,C
3 Duplicate postings of cash disbursements are made to Accounts Payable: C; Expense: O
general ledger Cash: C
4 Disbursements recorded in general ledger are not valid Accounts Payable: C; Expense: O
Cash: C
5 Disbursements made are not recorded Accounts Payable: E, Expense: C
Cash: E
6 Disbursements recorded differ from amounts paid Accounts Payable: V, Expense: O
Cash: V
7 Double payments made for one transaction Accounts Payable: C; Expense: O

Control Activities

Professional standards indicate that we should obtain an understanding of a client’s control procedures sufficient to
develop the audit plan. Document below the control procedures that the client has put in place to prevent or detect
errors in processing and recording transactions for this accounting process.

The absence of control procedures may require additional audit procedures relating to one or more financial statement
assertions for the account(s) affected.
Risk Related Controls
1 Check/bank transfer amount differ from payment Cashier make transfer payment tie-up with the supporting
voucher and supporting documents documents. It should be checked by Finance and approved
by Manager, on Bank transfer there is authorization from
General Manager & Director.

Understand the Flows of Transactions Page 5/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

2 Disbursements/transfers are recorded in the The Accounting Staff records the payment in the GL based
wrong period on the date stamp of Payment Voucher.

3 Duplicate postings of cash disbursements are Accounting staff write the date of post and number of
made to general ledger account and documment indicates reference number and
date of the GL entry in the Payment Voucher.

4 Disbursements recorded in general ledger are not Disbursement made link to the PO Number/Invoice
valid Number. It should be tie up with the supporting document

5 Disbursements made are not recorded Monthly bank reconciliation

6 Disbursements recorded differ from amounts paid Cashier make transfer payment tie-up with the supporting
documents. It should be checked by Finance and approved
by Manager, on Bank transfer there is authorization from
General Manager & Director.
7 Double payments made for one transaction Bank Transfer admin staff invalidates the Payment Voucher
and supporting documents by stamping it “PAID”.

Conclusion

There is no segregation of duties between cashier, the person who create the journal voucher, reviewer and sign the
cash disbursements voucher

Step by Step how to input AP Trade transaction in SAP system

Understand the Flows of Transactions Page 6/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

1. First is open the SAP system and click on "MIR6- Invoice Overview"

2. Input the packing number according to the voucher, and filled in the column as in this picture below, then click
checklist button above the document number.

3. After it was filled in, then will show as in this picture, click the pencil-like button.

Understand the Flows of Transactions Page 7/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

4. First column (data basic) just filled in the text column and matched with the voucher number

5. Payment column only changes “pmnt terms” matched in with due date payment

Understand the Flows of Transactions Page 8/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

6. Detail columns only filled in “Header text” matching it with column text in basic data

7. Tax column will automatically filled, the staff only check if it already match with the physical.

Understand the Flows of Transactions Page 9/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

8. No need to fill the withholding tax if there isnt, but if there is then the column (code I2), base FC (basic imposed
art 23), withholding tax amount.

9. Then click simulate button.

Understand the Flows of Transactions Page 10/11

Cash disbursements
 Understand the Flows of Significant Classes of Transactions, including Ref.:
Walk-through – Cash Disbursements

10. Results of simulate, then click post.

11. Input process done

Understand the Flows of Transactions Page 11/11

Cash disbursements