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by: Jarvis Reilly DDS


Jarvis Reilly DDS
GPA 3.8

Richard Dull

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Richard Dull
Class Notes
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This 4 page Class Notes was uploaded by Jarvis Reilly DDS on Saturday September 26, 2015. The Class Notes belongs to ACCT 322 at Clemson University taught by Richard Dull in Fall. Since its upload, it has received 39 views. For similar materials see /class/214237/acct-322-clemson-university in Accounting at Clemson University.

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Date Created: 09/26/15
The Account PayableCash Disbursements Process 3 Main Functions 0 Handles the related daytoday work routines like recording and paying vendor invoices and produce 0 Prepare internal reports for managers for decision making 0 Prepares external financial statements The Organizational Setting of Accounts Payable o The Horizontal Perspective 0 Flow 1 lnvoice from vendor 0 Flow 2 AP notifies the general ledger who updates the account for AP for the amount of the invoice 0 Flow 3 AP requests payment from the cashier and makes the general ledger aware of pending payment 0 Flow 4 Payment sent to vendor paid voucher sent to AP and notice of payment sent to general ledger o The Vertical Perpsective this includes all the small individual departments that help to execute the above flow chart they include 0 Warehouse manager uses purchasing data to control the inflows and outflows of inventory to provide space for goods 0 The controller uses purchasing and receiving data to validate incoming vendor invoices o The treasurer makes sure that there will be enough funds to pay for future obligations o The cashier has custody over the money and executes the payments authorized by AP 0 See figure 132 pg 466 Logical Process Description 0 DFD of AP process pg 467 two main processes establish payable and make payment 0 Establish Payable Receive invoice 10 o Validate invoice 11 0 Authorize the invoice by comparing it to master data and to purchase order and then compared to receiving data 0 Accuracy make sure discounts terms etc match the amt due on invoice 0 Recording the payable 12 0 Record data in purchase events data store to update accounts 0 Create record in AP master data amp update inventory master data 0 Notify and update the general ledger 0 Make Payment 20 0 Prepare proposed payments a list of invoices selected by due date and discount dates that could be paid 0 Select and record payments amending the list of invoices to pay by adding ones made to a vendor or holding off on delayed shipments 0 Issue and record disbursements calculate payment to be made 0 Mark invoice as paid 0 Make cash disbursement event in data store 0 Send payment to GL where entry is made to record pmt 0 Payment schedule depends on how company wants to pay bills many invoices to one vendor with one check or keeping cash balance high to cover other cash disbursements 0 Processing Noninvoiced Disbursements o 2 different systems for paying pg 471 DFD 0 True voucher process where all pmts recorded formally as a payable before they can be paid 0 Nonvoucher processless formal approve then issue and record payment 0 Logical Data Descriptions 0 Purchasing events data chronologically show the details of invoices that are recorded with date vendor invoice account distributions tax freight assets and gross amount paid 0 Accounts payable master data repository of all unpaid invoices including all details of invoice 0 Cash Disbursements events data chronological sequence of cash payments made with all details of invoice and terms of payment shown check number invoice number discounts etc 0 Logical Database Design Entity relationship diagram on 473 which assumes that it is a nonvoucher system and that it is all merchandise inventory items 0 The primary key of the relationship PAYMENTRELATO NS is a composite key comprised of the invoice number and the cash disbursement Technology Trends amp Developments 0 Einvoicing 3 ways 0 Scanning the paper invoice into the computer where you can view a digital image of the invoice but to create a payable system this way the information must be typed in a standardized manner to avoid error 0 Use of purchasing p cards this reduces the number of invoices by consolidating multiple orders into one big invoice o Submitting invoices over the internet 0 Evaluated Receipt Settlement ERS process by which an organization pays for a purchase on the basis of the goods receipt This eliminates the invoice entirely and is only used with trusted vendorsyou tell them what you received and pay according to the purchase order 0 Uses of Electronic Data Interchange EDI for the APCD process organization sends purchase order to vendor which is automatically entered into the vendor s sales system The vendor will send an advanced shipping notice telling them goods are on the way Vendor then sends invoice to customer via EDl which is automatically pout into the AP system When time for payment comes the organization prepares an EDl payment from their bank to the vendor o lmproves accuracy reduces costs no delay or lost papers 0 Epayments Electronic lnvoice Presentment and Payment Systems ElPP o 828 systems that combine einvoicing and epayment processes that send invoices to customers using a web portal or a 3rd party vendor Business need to integrate their business processes and integrate their legacy AP amp CD systems with that of the 3rd party I Savings are in reduced staff paper and postage fewer errors I Eliminates float which can be bad for the payer o XIG N s order to pay process is operated on a network called XPSN o The buying organization creates purchase order which is put into XIGN format onto the server 0 Email notifies seller of PO order which can be sent directly to their sales system 0 lnvoices from vendor can be done 3 ways I Log on to XPSN and convert PO to invoice I Create efile to link billing system with XPSN I Use web template to create invoice 0 Buyer receives invoice through enterprise adapter 0 Reduces costs from manual processing increased efficiency in routing reduced vendor calls Physical Process Description 0 Pg 481 flowchart 0 Uses batches compares purchase orders and receiving report and then updates payables and GL 0 To pay the invoices the AP data is searched periodically to see what invoices are due then paid then update the AP master data the GL for payment and sends data to EDI translator which appropriately encrypts the data for the banks to pick up 0 The bank processes information and debits the payables of the buyer and credits receivables of seller 0 Exception Routines 0 Purchase returns and allowancesoccurs when inspecting amp counting goods I To adjust for returned goods a debit memorandum is prepared and sent to vendor where the vendor usually prepares a credit memo the goods are set aside and then returned upon agreement of credit memo o Other exceptions I mismatch of reports can result in purchase allowance I accept errors within certain of error I when reconciliation of batches doesn t match cash payments 0 The Fraud Connection 0 Fraud amp AP Function I creating phony vendors in vendor master data I submitting fictitious invoices 0 Fraud amp CD function I Check forgery fraudulent wire transfers I Counterfeit checks and cash 0 Nonfraudulent Losses 0 Overpayment of accounts payable I lncorrect decimal place I Mistake which vendor to pay accidenty pay twice Application of the Control Framework 0 Operations Control Goals 0 Effectiveness of operations I Optimize cash discountsrecorded amp paid in timely manner I Amount maintained in CD accounts is enough to satisfy invoices with cash discounts accounted for 0 Efficient employment of resources people and computers 0 Resource Security cash and AP data should be protected against fraud and other losses 0 Information process control goals 0 Input validity I Invoices what was ordered is what was received I Payments documented by valid and unpaid as to not pay twice 0 Input Completeness of invoices amp payments may result in lost discounts and late payments Unrecorded invoices understate liabilities 0 Input accuracy I Of invoices update payable data misstates liabilities incorrect dates set off payment schedule I Of Payments when pmt due terms of pmt don t duplicate pmt 0 Update completeness and accuracy of AP master data must be updated properly to pay and close invoices when complete 0 Recommended Control Plans 0 Independent Validation of vendor Invoices separate authorities like purchase orders and receiving data should record the vendor invoice not all the same person in order to prevent unauthorized invoices 0 Match Invoice w purchase order and receiving report 0 Independent Authorization to make payment AP records should be prepared by someone other than who actually executes the payments 0 Reconcile the bank accounts 0 Make sure to mark paid or void so not accidently paid again 0 Multiple signatures on checks 0 Don t allow long time outstanding checks to be cashed 0 Control matrix and explanations on pg 485 amp 487


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