MAJOR ACTIVITIES
The expenditure cycle deals with
Context diagram for the expenditure cycle.
Level 0 DFD for the expenditure cycle.
Controls will be added during class.
ACTIVITY | OBJECTIVES | CONTROLS |
---|---|---|
1.0 Validate Requisition |
All requisitions are for goods actually needed. In other
words, what prevents the processing of a requisition for
goods that are not needed?
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_ |
2.0 Prepare P.O. |
Purchase orders are issued for all valid requisitions. In
other words, what prevents a valid requisition from getting
lost?
Purchase orders are issued for only valid requisitions. In other words, what can prevent someone from issuing an unauthorized purchase order? Purchase orders are sent to vendors who will provide a suitable product & service at a fair price. In other words what prevents you from paying too much or getting goods that are of an inferior quality? All purchase orders are processed by the vendor. In other words, how would you know if a purchase order was not processed by the vendor?
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_ |
3.0 Validate invoice. |
No payables are omitted for goods ordered and received.
In other words, what prevents goods from being ordered
and received, but never recorded or paid for?
Payables are only recorded for invoices where the goods were actually ordered and received. In other words, what prevents recording a payable (invoice) for goods that were not ordered or received? Disbursements are made for all valid payables.
| _ |
4.0 Prepare check. |
Checks are disbursed only for goods that were ordered
and received. In other words, no one steals!
Duplicate payments are not made. In other words, only pay each invoice once. All checks are recorded in the cash disbursement journal.
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_ |
IDENTIFICATION OF WEAKNESSES.
In order to identify weaknesses, you must first understand the operation of the expenditure cycle. You should review figures 7.10 & 8.10 and the text's discussion of these activities.
See problem 7-66, page 296.
Answer will be posted after working this problem in class
See problem 8.69, page 344.
5-33 B; 5-36 D; 5-43 A.
7-24 C; 7-25 A; 7-27 A; 7-33 A; 7-34 B;
7-37 B; 7-48 B; 7-49 D; 7-51 C; 7-57 D
8-24 D; 8-27 D; 8-28 A; 8-30 A; 8-31 C;
8-34 D; 8-40 C; 8-43 A; 8-44 B; 8-49 A;
8-50 C; 8-51 C; 8-52 D; 8-53 B; 8-55 D