Expenditure Cycle: Purchase and Cash Disbursements

Expenditure Cycle: Purchase and Cash Disbursements

1. Based Activity

   • Ordering of Goods, Supplies, and Services
   • Receiving and Storing Goods, Supplies, and Services
   • Pay for Goods, Supplies, and Services

2. Alternative Methods of inventory control

   • Mmaterials Requirements Planning (MRP)
   • Just-in-time (JIT)

3. Destination of Expenditure Cycle

   • All transactions are properly authorized
   • All recorded transactions are valid
   • All transactions are valid and authorized has been noted
   • Assets safeguarded from the risk of loss or theft
   • Business activities are performed efficiently and effectively

4. Threats

   • Ordering of goods
     • Preventrunning out and/or excess inventory
     • Requesting unneeded items
     • Buy at inflated prices
     • Buy low quality goods
     • Buy from a supplier who is not authorized
   • Receiving and Storing goods
     • Not receive goods ordered
     • Make a mistake in the calculation
     • Stealing Supplies
   • Pay for goods
     • Failed to catch errors in vendor invoices
     • Pay for goods not received
     • Failed to take advantage of purchase discounts available
     • paying the same invoice twice
     • Error record and enter data in accounts payable
     • Misappropriate cash, check, or EFT

5. Common control issues

   • Loss of data
   • Poor performance