Expenditure Cycle control documents PDF

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Expenditure Transaction Cycle Control Documents

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Control objectives 1. We buy from good vendors we like to deal with 2. Our purchases, payables and payments are all controlled and promptly / properly accounted for 3. We hire people who can do what we need them to and fit our plans 4. We pay people wages and amounts and make those deductions that management approves of 5. We keep confidential HR stuff confidential Key documents Budget – high level financial control. Allows matching of objectives and resources and then management of results, not detailed tasks undertaken to achieve the results. 1. Meets control objectives 2, 3, 4 2. Provides Authorization and Recording 3. Can tie to administration, operations or production Purchase Requistion – internal document to make a requirement determination known to the purchasing stream. Note is most often subject to budgetary control. Can be operation dept or stores (warehouse) 1. Meets control objective 2 2. Provides Authorization and Recording 3. Provides separation of determination of need and contact with vendor 4. Pass copies to A/R for cheque voucher

(VENDOR MANAGEMENT STREAM) Vendor List – control list of those vendors the firm has chosen to deal with. Can be linked to cash disbursements as control. Can be linked to budgetary controls ($X per year to vendor). Can be linked to contact lists (only specified people allowed to contact). 1. Meets control objectives 1, 2 2. Provides Authorization RFX- RFP, RFQ, RFI – invites vendor to provide competitive information such as pricing and terms. May lead directly to contract. 1. Meets control objectives 1, 2 2. Can be controlled by reference to budgets 3. Provides no specific CAR – is tool in selection of vendor Contract – note SAP uses contract as a control concept – each vendor needs a “contract” or outline or scheduling agreement. Sets out limits of transactions that can be carried out before relationship is reviewed and reaffirmed (re approved). Legal contract – document explaining terms and conditions that outline the agreed upon relationship between vendor and purchaser. 1. Meets control objective number 1 and 2. Possibly number 4 if personal service contract. 2. Provides Authorization and Recording

Expenditure Transaction Cycle Control Documents

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Master File – record of contacts, authorized purchases, terms. (PROCUREMENT STREAM) Purchase Order – issued after receiving notice of goods requirement. Can be subject to budget controls. 1. Meets control objective 1 and 2 2. Provides Authorization and Recording 3. Confirms details of goods ordered, prices quoted, quantities and specifications, terms of delivery. Can be multiple media. 4. Can draw from contract or create separate legal relationship 5. Can be linked to payments – no payment without PO 6. Can be linked to budgets 7. Pass copies to A/R for cheque voucher Receiving Report – created by shipping receiving. Evidence of what actually was received, independent of what was ordered. 1. 2. 3. 4. 5. 6. 7. 8.

Meets control objective 2. Provides Custody and Recording Should be prepared first, then matched to PO Does not need to refer to pricing and terms Can be used to reject partial and or damaged or non ordered goods Use as no receipts without PO number Match to bill of lading info Pass copies to A/R for cheque voucher

Inventory Transfer – records movement of inventory between receiving and warehouse. 1. 2. 3. 4.

Meets (loosely) control objective #2 Provides Custody and Recording Can tie to physical inventory counts Can tie to PO

Invoice Voucher (Verification) – matching of documents prior to preparation of cheque 1. Meets control objectives 1, 2 2. Provides Recording, Authorization 3. Matches evidence of all prior steps in process – budget, requirements determination, vendor selection and approval, approved order, receipt of goods 4. Authorizes separate group to prepare cheque Cheque – document that releases cash 1. Meets control objective 2 2. Provides Custody....