This chapter explain the basic business activities and related information processing operations performed in the expenditure cycle. Discuss the key decisions to be made in the expenditure cycle, and identify the information needed to make those decisions. Identify major threats in the expenditure cycle, and evaluate the adequacy of various control procedures for dealing with those threats. | Chapter 13 The Expenditure Cycle: Purchasing to Cash Disbursements Copyright © 2012 Pearson Education 13-1 Learning Objectives Explain the basic business activities and related information processing operations performed in the expenditure cycle. Discuss the key decisions to be made in the expenditure cycle, and identify the information needed to make those decisions. Identify major threats in the expenditure cycle, and evaluate the adequacy of various control procedures for dealing with those threats. Copyright © 2012 Pearson Education 13-2 The Expenditure Cycle Copyright © 2012 Pearson Education 13-3 The Expenditure Cycle Activities and information processing related to: Purchasing and payment of Goods and services Primary objective: Minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function Copyright © 2012 Pearson Education 13-4 Expenditure Cycle Activities Ordering materials, supplies, and services . | Chapter 13 The Expenditure Cycle: Purchasing to Cash Disbursements Copyright © 2012 Pearson Education 13-1 Learning Objectives Explain the basic business activities and related information processing operations performed in the expenditure cycle. Discuss the key decisions to be made in the expenditure cycle, and identify the information needed to make those decisions. Identify major threats in the expenditure cycle, and evaluate the adequacy of various control procedures for dealing with those threats. Copyright © 2012 Pearson Education 13-2 The Expenditure Cycle Copyright © 2012 Pearson Education 13-3 The Expenditure Cycle Activities and information processing related to: Purchasing and payment of Goods and services Primary objective: Minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function Copyright © 2012 Pearson Education 13-4 Expenditure Cycle Activities Ordering materials, supplies, and services Receiving materials, supplies, and services Approving supplier invoices Cash disbursements Copyright © 2012 Pearson Education 13-5 Expenditure Cycle General Threats Inaccurate or invalid master data Unauthorized disclosure of sensitive information Loss or destruction of data Poor performance Copyright © 2012 Pearson Education 13-6 Expenditure Cycle General Controls Data processing integrity controls Restriction of access to master data Review of all changes to master data Copyright © 2012 Pearson Education 13-7 Ordering Threats Inaccurate inventory records Purchasing items not needed Purchasing at inflated prices Purchasing goods of inferior quality Unreliable suppliers Purchasing from unauthorized suppliers Kickbacks Copyright © 2012 Pearson Education 13-8 Ordering Controls Perpetual inventory system Bar coding or RFID tags Periodic physical counts of inventory Perpetual inventory system Review and approval of purchase requisitions Centralized purchasing function Price lists Competitive .
