The Purchasing/ Accounts Payable/ Cash Disbursement (P/AP/CD) Process

Chapter
1
Chapter 12
IntroductionThe
to Purchasing/
Accounting Information
Accounts Payable/
Systems
Cash Disbursement
(P/AP/CD) Process
1
Learning Objectives
Know definitions/basic functions of P/AP/CD
Relationship between P/AP/CD &
environment
Logical/physical characteristics of P/AP/CD
Special requirements of payroll process
Technology to implement P/AP/CD
System control goals and plans for P/AP/CD
Expenditure cycle (merchandising)

P/AP/
CD process
Expenditure
General
ledger
Cycle
Inventory
process
Payroll
3
Vertical perspective - P/AP/CD

VP
Finance
Treasurer
Cashier
VP
Logistics
Controller
Supervisor,
payroll
Supervisor,
accounts payable
Warehouse
manager
Supervisor,
receiving
Purchasing
manager
Buyers
Horizontal information flows

4
Horizontal Information Flows

Purchase requisition from inventory control to
purchasing
Requisitions from other depts. to purchasing
Purchase order to vendor
PO notification to other depts. or inventory
PO notification to receiving
PO notification to accounts payable
Goods/services received from vendor
6
Horizontal Information Flows (2)
Receiving notification to accounts payable

Receiving notification to purchasing
Invoice received from vendor
Approved voucher to cashier
AP notification & inventory cost info to GL
Check to vendor by cashier
Paid voucher to accounts payable
Notification of cash disbursement to GL
7
Inventory
process
1.0
Order
goods
& services
Notification
Purchase
requisition
Various
depts.
General
Ledger
Purchase
order
Inventory master
Inventory's
purchase
requisition
Vendor master data
PO
notification
PO accounts
payable
notification
Employee
time
record
GL inventory
rec'd update
Inventory
master data
3.0
Establish
payable
Vendor
invoice
General
Ledger
System
Disbursement event
data
Receiving
report
Receiving reports
2.0
Receive
goods
& services
Inventory master data
Vendor
packing
slip
Stock
notice
Carrier
Payroll data
Vendor
payment
GL cash
disbursement
update
PO master data
PO
receiving
notification
GL payable
update
Vendor
Vendor
Vendor
acknowledgement
AP Master data
4.0
Make
payment
Warehouse
Employee
payment
Employee
Vendor master data
ER diagram - P/AP/CD
10
11
12
13
14
Control Goals of the Business Process

Control Goals of the
Operations Process
Control Goals of the Information Process

Purchasing Subsystem Receiving Subsystem
Recommended
Control Plans
Ensure effectiveness
Ensure
of operations by
Ensure For purchase For purchase
achieving the following efficient security
requisition
order master
employprocess goals
of
ment of
Inputs, ensure: data, ensure
resources resources
A B C D
P-5: Independent authorization

to make payment
P-6: Independent validation
of vendor invoice
P-7: Vendor invoice math
accuracy check
For P.O.
master data,
ensure
IV IC IA UC UA IV IC IA UC UA
P-1
P-1: Requisition audit data

P-2: Authorized vendor data P-2
P-3: Requisition confirmation
to originating department
P-4: Approve vendor selection P-4
For vendor
packing slip
inputs,ensure:
P-2
P-2
P-3
P-4
P-5
P-6
Key: possible system goals:

A Select vendor best quality, lowest price by promised delivery data
B Ensure that right goods in acceptable condition received
C Optimize cash discounts
D Ensure sufficient but not excessive cash
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy 15
Control Goals of the Business Process (Continued)

Control Goals of the
Operations Process
Control Goals of the Information Process
Payables Subsystem CD Subsystem
Recommended
Control Plans
Ensure effectiveness
Ensure
of operations by
Ensure
For vendor
For accounts For payment
For A/P
achieving the following efficient security invoice inputs, payable master voucher inputs, master data,
employprocess goals
of
ment of
ensure:
data, ensure:
ensure:
ensure
resources resources
A B C
IV IC IA UC
UA
IV IC IA UC
P-1: Requisition audit data

P-2: Authorized vendor data
P-3: Requisition confirmation
to originating department
P-4: Approve vendor selection
P-5: Independent authorization
to make payment
P-6: Independent validation
of vendor invoice
P-7: Vendor invoice math
accuracy check
P-5
P-5
P-6
P-6
Key: possible system goals:

A Select vendor best quality, lowest price by promised delivery data
B Ensure that right goods in acceptable condition received
C Optimize cash discounts
D Ensure sufficient but not excessive cash
P-7
IV = input validity
IC = input completeness
IA = input accuracy
UC = update completeness
UA = update accuracy
16
UA
Learning Objectives
Know definitions/basic functions of P/AP/CD
Relationship between P/AP/CD &
environment
Logical/physical characteristics of P/AP/CD
Special requirements of payroll process
Technology to implement P/AP/CD
System control goals and plans for P/AP/CD

The Purchasing/ Accounts Payable/ Cash Disbursement (P/AP/CD) Process

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Chapter

Expenditure cycle (merchandising)

Vertical perspective - P/AP/CD

Horizontal information flows

Horizontal Information Flows

Horizontal Information Flows (2)

Receiving notification to accounts payable

Vendor master data

Inventory master data

Vendor master data

Control Goals of the Business Process

Control Goals of the Information Process

P-5: Independent authorization

P-1: Requisition audit data

Key: possible system goals:

Control Goals of the Business Process (Continued)

Control Goals of the Information Process

Payables Subsystem CD Subsystem

P-1: Requisition audit data

Key: possible system goals:

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