1. Chapter 1 Chapter 12 The Purchasing/ Accounts Payable/ Cash Disbursement (P/AP/CD) Process Introduction to Accounting Information Systems

2. Learning Objectives • Know definitions/basic functions of P/AP/CD • Relationship between P/AP/CD & environment • Logical/physical characteristics of P/AP/CD • Special requirements of payroll process • Technology to implement P/AP/CD • System control goals and plans for P/AP/CD

3. Expenditure cycle (merchandising) P/AP/ CD process Inventory process Expenditure Cycle General ledger Payroll

4. Vertical perspective - P/AP/CD

6. HorizontalInformationFlows • Purchase requisition from inventory control to purchasing • Requisitions from other depts. to purchasing • Purchase order to vendor • PO notification to other depts. or inventory • PO notification to receiving • PO notification to accounts payable • Goods/services received from vendor

7. HorizontalInformationFlows(2) • Receiving notification to accounts payable • Receiving notification to purchasing • Invoice received from vendor • Approved voucher to cashier • AP notification & inventory cost info to GL • Check to vendor by cashier • Paid voucher to accounts payable • Notification of cash disbursement to GL

10. ER diagram - P/AP/CD

15. Control Goals of the Business Process Control Goals of the Operations Process Control Goals of the Information Process Purchasing Subsystem Receiving Subsystem Ensure effectivenessof operations by achieving the following process goals Ensure efficient employ- ment of resources Ensure security of resources For purchase requisition Inputs, ensure: For purchase order master data, ensure For vendor packing slip inputs,ensure: For P.O. master data, ensure Recommended Control Plans A B C D IV IC IA UC UA IV IC IA UC UA P-1: Requisition audit data P-1 P-2: Authorized vendor data P-2 P-2 P-2 P-3: Requisition confirmation to originating department P-3 P-4: Approve vendor selection P-4 P-4 P-5: Independent authorization to make payment P-5 P-6: Independent validation of vendor invoice P-6 P-7: Vendor invoice math accuracy check Key: possible system goals:A – Select vendor – best quality, lowest price by promised delivery data B – Ensure that right goods in acceptable condition received C – Optimize cash discounts D – Ensure sufficient but not excessive cash IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy

16. Control Goals of the Business Process (Continued) Control Goals of the Operations Process Control Goals of the Information Process Payables Subsystem CD Subsystem Ensure effectivenessof operations by achieving the following process goals Ensure efficient employ- ment of resources Ensure security of resources For vendor invoice inputs, ensure: For accounts payable master data, ensure: For payment voucher inputs, ensure: For A/P master data, ensure Recommended Control Plans A B C D IV IC IA UC UA IV IC IA UC UA P-1: Requisition audit data P-2: Authorized vendor data P-3: Requisition confirmation to originating department P-4: Approve vendor selection P-5: Independent authorization to make payment P-5 P-5 P-6: Independent validation of vendor invoice P-6 P-6 P-7: Vendor invoice math accuracy check P-7 Key: possible system goals:A – Select vendor – best quality, lowest price by promised delivery data B – Ensure that right goods in acceptable condition received C – Optimize cash discounts D – Ensure sufficient but not excessive cash IV = input validity IC = input completeness IA = input accuracy UC = update completeness UA = update accuracy

17. Learning Objectives • Know definitions/basic functions of P/AP/CD • Relationship between P/AP/CD & environment • Logical/physical characteristics of P/AP/CD • Special requirements of payroll process • Technology to implement P/AP/CD • System control goals and plans for P/AP/CD