Tutorial 3a Accounts Payable Flashcards
(7 cards)
In general
Debts that have to be paid in less than a year
Main risk :
Invoices wrongly approved and as a consequence paid
Typical information needs
Accounts payable per expiration period
Overview of total debt per foreign currency
Debt ratio
Steps in account payable process
- Receipt of invoice -(recording in accounts payable file)
- Check of invoice - (accuracy of ; prices,numbers stated and received, arithmetic correctness, accuracy of the sender, foremost bank account)
- Management of accounts payable -( record approved invoices, preparing list of recommended payments, prepare reports about composition of accounts payable, process completed payments in accounts payable file
- Payment : seperate sheer
Payment stages
Create and authorise payment advice list
Create a payment file in payment application
Authorise payment file
Send payment file to bank using payment application
Reception of file and payment by bank
Processing of payment info received from the bank in accounts payable file
Risks
Accuracy of payments made
Ghost invoices
Fully recording of obligations from purchases made
Preventive control activities
Budgeting :
Cash budget
Includes expected receipts from revenues and disbursements
Segregation of duties :
-between person who makes purchase (authorisation) and employee of accounts payable department (custody), head of accounting department ( checking ) and top management (authorisation) who authorises payment advice list
Procedures and guidelines :
- checking invoices
- updating accounts payable file
- authorisation of payments
Detective controls
Analytical reviews
-actual amounts of AP v budget and previous periods
-actual amount of accounts payable compared to purchases and goods received
Reconciliations:
- decreases purchasing = increase inventory file = increase accounts payable file; Decrease accounts payable payable = Decrease bank account
Detailed check :
Invoice check
Payments made compared to payment advice list
