The Expenditure Cycle Flowcharts

What are the three steps of the expenditure cycle

Ordering
Receiving
Paying

Ordering: What begins the ordering cycle?

Employee of any dept identifies a need

Ordering: What does the employee do to make their need known?

Make 3 purchase requisitions

Ordering: Where does the employee send the 3 purchase requisitions?

File
Accounts Payable
Purchasing

Ordering: What does purchasing do with the purchase requisition?

Approves purchase and Prepares PO

Ordering: How many copies of the PO does the purchasing dept make?

5

Ordering: Where do the 5 POs from the Purchasing Dept go?

File (with Purch Req 2)
Vendor
Receiving
Accounts Payable
Employee

Ordering: Approval of purchase requisition requires two levels of approval from?

Dept head
Purchasing dept

Ordering: What is the controls in place within this part of the expenditure cycle?

Approval by two parties
Authorize using prenumbered POs
Use approved vendor master files

What is the importance of reconciling documents? What does it prevent?

failure to bill
Failure to pay

Receiving: What does the receiving department get (and from who)?

Packing Slip and goods (Vendor)
Purchase order 2 (Purchasing)

Receiving: What does the receiving dept do with the goods, packing slip, and PO

count goods
prepare receiving report

Receiving: How many receiving reports are made and where do they go?

1 File (with PO)
2 Accts payable
3 Requesting dept

Receiving: What does the requesting department do with the RR and PS and goods?

Inspect goods
Compare with RR
Update records (inventory)
Match RR with PR
File RR and PS with PR

Receiving: What is the controls in place within this part of the expenditure cycle?

Matching/Comparing/Inspecting goods are acceptable and requested amt
Physical controls over inv
Use pre numbered RR
Only accept goods with a PO
Employee signoff/RFID

Paying Part 1 (with AP): What are the controls in place within this part of the expenditure cycle?

Use prenumbered vouchers
Have edit controls in place
Verify qty, price, extensions, and footing
File by payment date until sent to cashier
File by date to ensure make discount payments on time

Paying Part 2 (with Cashier): What is the controls in place within this part of the expenditure cycle?

Restrict access to check stock
Always prepare info prior to preping check
only pay with RR
use Pre #ed checks
Bank recons done by personnel independent of Cashier

Paying: What does the Accounts Payable Dept receive (from where)

PR (requesting dept)
PO (Purchasing)
RR (Receiving)
Invoice and remit adv (vendor)

Paying: what does the paying dept do with the PR, PO, RR, and Invoice?

Compare and match docs
Verify invoice accuracy
Prepare voucher packet
Prepare daily voucher summary
Update Subsidiary AP

What is included in a voucher packet?

PO
RR
Invoice

Paying: What does the AP dept send out after comparing and verifying the documents and to where?

Daily voucher 1 (accting)
Daily voucher 2 (file)
Voucher, PO, PR, RR, Invoice, Remit Adv (cashier)

Paying: What does the cashier receive from the AP Dept?

Invoice with Remit Adv
PR
RR
PO
Voucher

Paying: what does the cashier do?

Compare info on docs
Prepares check

Paying: what does the cashier send out after verifying docs (and to where) ?

Check and Remit Adv (vendor)
Daily check summary (Accting)
Invoice, PR, RR, PO, Voucher (AP)

Paying: What does the AP dept do with the docs from CASHIER ( Invoice, PR, RR, PO, Voucher)

Updates subsidiary accounts
File