2. NATURE:
EXPENDITURE
– acquisition of
goods and
services
DISBURSEMEN
T – payment of
cash
Financing
and
Conversion
Cycle
Revenue
and
Receipt
Cycle
Expenditu
re and
Disbursem
ent Cycle
3. 3 types of transactions
associated with Revenue
and Receipt Cycle:
1.Purchase of goods and
services (cash/credit)
2.Payment of obligation
3.Return of goods
(cash/credit)
4. Types of
documents used
and accounting
records:
1.Purchase
requisition
2.Purchase order
3.Receiving report
4.Vendor’s invoice
5.Vendor’s
package
journal
7.Accounts
payable
subsidiary ledger
8. Vendor
statement
9. Cash
disbursement
5. Business Function of Revenue and Receipt
Cycle:
1.Purchase requisition
Request for goods and services by an
authorized individual
Sent to supervisor/manager for approval.
2. Purchasing
Request is reviewed, a supplier selected,
and a purchase order prepared
Copies of purchase orders are sent to
supplier, requisitioning department,
Receiving, and Accounts Payable
6. 3. Receiving
Comparing of goods received and
purchase order
Receiving report is prepared
4. Accounts payable
File receiving reports with related
purchase requisitions and purchase
orders pending receipt of the vendor’s
invoice
Voucher package
7. 4. Cash disbursements
Review voucher packages for accuracy
and authenticity before approving
vouchers for payment and submitting
vouchers for check printing
Proper procedures for
blank/voided/unused/drawn/signed
checks, paid voucher packages, daily
summary of remittances
8. Control Objectives and Fraud:
1.Transaction Authorization
Purchases should be initiated by user
departments and approved by authorized
supervisors/managers
Suppliers should be approved by
managers
2. Transaction Execution
Goods should be inspected for quality an
quantities
Control against improper disbursements
Accounts payable has responsibility for
verifying the propriety of acquisitions
9. 3. Transaction Recording
All goods and services received should
be reported promptly to Accounts Payable
and Purchasing
Policies to assure that all purchases and
cash disbursements are recorded properly
and in the proper period
2. Access to assets
Pre-numbering and controlling forms and
documents; maintaining lists and samples
of authorized signatories; and segregating
responsibility for authorizing, executing, and
recording
10. CONTROL RISK ASSESSMENT
Obtain an understanding
1.Preliminary review
2.System documentation
3.Transaction walk-through
4.Identification of control procedures
11. Test of Controls
1.Purchasing
2.Receiving
3.Cash disbursement and Recording
Reassess control risk and design
substantive tests