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EXPENDITURE CYCLE

EXPENDITURE CYCLE. Chapter 13 Acquire Goods and Services Pay for Goods and Services Spring 2002. If the Expenditure Cycle Fails. Inventory is under-stocked. Inventory is over-stocked. Disbursements made for unauthorized purposes. Cash Receipt Fraud. Cash Disbursement Fraud.

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EXPENDITURE CYCLE

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  1. EXPENDITURE CYCLE Chapter 13 Acquire Goods and Services Pay for Goods and Services Spring 2002

  2. If the Expenditure Cycle Fails • Inventory is under-stocked. • Inventory is over-stocked. • Disbursements made for unauthorized purposes.

  3. Cash Receipt Fraud

  4. Cash Disbursement Fraud

  5. Revenue Cycle Create Sales Order Ship Goods Send Invoice Collect Cash Expenditure Cycle Create PO Receive Goods Receive Invoice Disburse Cash Expenditure Cycle is Mirror of Revenue Cycle

  6. Identify a Need • Need to know when to order • Reorder point, two bin system, MRP • Need to know what to order • EOQ, MRP, JIT • Needs identified outside of purchasing.

  7. Approve Requisitions • Needs communicated to purchasing • Use purchase requisition (p. 470) • Purchasing reviews requisition • Proper approval • Within budgets

  8. Select Vendor • Use approved vendor list. • You get what you pay for! • Important factors in this decision: • Price and quality of product • Ability to deliver on time • Service after the sale • Other features

  9. Create Purchase Order • Purchase order becomes contract between buyer and vendor. • P.O. example: p. 473 • System example: p. 474

  10. Alternatives to POs • Procurement Cards • Focus 13.2 (p. 476) • Custom On-line Catalogues

  11. Control Over Purchasing Agents • True Story: • Purchasing agent given Bulls tickets. • Purchasing agent given Weber grill. • What can be done to assure that purchasing agents engage in arms length transactions?

  12. Receive Goods • Count & compare to packing slip & P.O. • Test basis? • May also use a “blind” P.O. • Inspect quality. • Document on receiving report.

  13. Deliver Goods • Route goods to warehouse or other departments. • End users sign for goods. • Examples: p. 478 & 479.

  14. Approve Payment } • Purchase Order • = Receiving Report • = Invoice Approved Invoice Record liability. File by due date.

  15. Prepare & Make Disbursement • Cashier prepares check. • Treasurer • reviews supporting documentation before signing check. • signs check, cancels supporting documentation, and mails check • Record disbursement.

  16. Summary Order Goods Receive Goods Approve Invoice Disburse Cash

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