Expenditure Cycle Flashcards
(23 cards)
Inaccurate inventory records
- Perpetual inventory system
- Bar codes and RFID
- Periodic physical counts with reconciliation
Purchase items not needed
- Perpetual inventory system
- EOQ, MRP, JIT systems
- Approval of requisitions
- Centralized purchasing function
Inflated prices
- Price lists
- Competitive bidding
- Review and approval of POs
- Budget and comparison of actual to budgets
Inferior/poor quality
- Pre-approved suppliers only
- New supplier audit and approval
- Responsibility for scrap or rework
- Quality surveillance and reporting
Unreliable suppliers
- Supplier quality certifications (e.g. ISO9000)
- Audit and monitor supplier performance
Unauthorized suppliers
- Application control to prevent unauthorized
- New supplier audit and approval
Kickbacks
- Policy, training, signed statements, personal disclosure
- Job rotation and mandatory vacations
- Supplier audits to validate PO
Accepting unordered items
- Compare to PO
Counting errors
- Do not disclose expected quantity
- Bar codes and RFID
- Transfers are re-counted and documented
- Application controls report discrepancies
Verifying receipt of services
- Document receipt with signature
- Budget controls and audits
Theft of inventory
- Physical access controls
- Document transfers
- Perpetual inventory system
- Physical count of inventory and reconciliation
- Segregation of duties
Errors in Supplier invoices, paying for items not received
- Compare invoice to PO and receiving report
- Check math
Fictitious vendors/suppliers
- Approve new vendors
- Restrict access to vendor master file
- Document receipt of goods/services
Accounts Payable posting errors
- Data entry edit controls
- Reconcile AP subsidiary ledger detail to General Ledger
Pay for items not received
- Three way match or ERS
- Check signer reviews voucher package
- Receipts for all expense reports, petty cash, etc
Duplicate payments
- Cancel voucher packages when paid
- Require voucher package for each check
- Pay only original invoices
- Application software checks for duplicates
Theft of cash
- Pre-numbered, secure check stock
- Secure check signing machine
- Access control for EFT and online banking
- Do not let AP write checks
- Reconcile bank accounts - independent person
- Count cash on hand and reconcile
Check alteration
- Special inks and paper
- Positive Pay with banks
Missing prompt payment discounts
- Schedule payments on due dates
- Cash flow budget
Cash flow problems
- Cash flow budget and monitoring
Invalid or inaccurate master data
- Restrict access - Segregation of Master File changes and recording
- Chapters 7&8: encryption, access controls, authorization controls
Loss or destruction of data
- Chapters 7&8: disaster recovery plan, offsite backups, insurance
Poor performance
- Hire competent people and train them
- Performance reports to identify non-conformance
