ACCT 4225 Individual Case #3

Case Study > ACCT 4225 Individual Case #3 - Steph.

Mount Royal University ACCT 4225 ACCT 4225 A1. Purchase – Payables – Payment Cycle Flowchart A2. Purchase – Payables – Payment Cycle Controls Control Identified Control Description Financial Statement Assertion Evidence that is important to record / track a. Purchases Pre-numbered ...[Show More]

Mount Royal University
ACCT 4225
ACCT 4225

A1. Purchase – Payables – Payment Cycle Flowchart

A2. Purchase – Payables – Payment Cycle Controls

Control Identified Control Description Financial Statement

Assertion

Evidence that is

important to record /

track

a. Purchases

Pre-numbered

Requisition Forms used

Warehouse employee

should create a

requisition form for

new purchases of

inventory. When

created, one copy is

sent to purchasing

person and another is

sent to Accounts

Payable department

Authorization The description of

items and the number

requested is important

so that it can be

matched when

received. An

authorized signature is

also required to prove

authorization.

Pre-numbered Purchasing department Authorization, Validity The information on the

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Purchase Orders are

used

creates PO based on

the approved

requisition and sends

copies to accounts

payable, supplier and

receiving department

requisition should align

to the information on

the created purchase

order. Purchase order

should be signed.

Pre-numbered

receiving reports are

used

When goods received,

the receiving report is

completed and

matched to the

corresponding

purchase order. Goods

are checked for quality

and number and date

of receipt is recorded

and signed off.

Validity Date of receipt and

signature is required to

determine when a

liability exists for the

company. Match to the

purchase order is

required. Look for

unmatched receiving

reports.

b. Payables

4 way match of

documents prior to

creating the liability

Accounts Payable

department gathers

and matches signed

requisition, PO, and

receiving report before

recording the customer

invoice as a liability

Validity, Authorization,

Completeness,

Valuation

Date on the receiving

report and invoice

required for cut off.

Signatures on

purchasing documents

required to show

authorization.

Pre-numbered cheques

are used and matched

to the customer invoice

Accounts Payable

person uses prenumbered cheques and

matches to the

customer invoice.

Validity Aut