Chapter 9 - Expenditures processes and controls - purchases. This chapter presents the following content: An introduction to expenditures processes, purchasing processes and the related risks and controls, purchase return processes and the related risks and controls,. | Chapter 9 Chapter 9 Expenditures Processes and Controls - Purchases An introduction to expenditures processes Purchasing processes and the related risks and controls Purchase return processes and the related risks and controls Cash disbursement processes and the related risks and controls An overview of IT systems of expenditure and cash disbursement processes that enhance the efficiency of expenditures processes Computer-based matching of purchasing documents and the related risks and controls Evaluated receipt settlement systems and the related risks and controls E-business and electronic data interchange (EDI) systems and the related risks and controls E-payables systems Procurement cards Ethical issues related to expenditures processes Corporate governance in expenditures processes Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Real World Costs involved in purchasing Purchase price of Inventory Cost to conduct purchases Cost of writing checks Wages and salaries to those in purchasing and payments Companies are always looking for ways to reduce costs and improve efficiency. General Electric Co. Web based electronic invoice presentment (EIP) Avoids cost of receiving and entering paper invoices Agreed to pay within 15 days for a discount for EIP invoices Paper invoices paid within 60 days In 6 months 45% of vendors switched to EIP 12% reduction in cost of payables processing When a purchase occurs, the information resulting from that purchase must flow into the purchase recording systems, the accounts payable and | Chapter 9 Chapter 9 Expenditures Processes and Controls - Purchases An introduction to expenditures processes Purchasing processes and the related risks and controls Purchase return processes and the related risks and controls Cash disbursement processes and the related risks and controls An overview of IT systems of expenditure and cash disbursement processes that enhance the efficiency of expenditures processes Computer-based matching of purchasing documents and the related risks and controls Evaluated receipt settlement systems and the related risks and controls E-business and electronic data interchange (EDI) systems and the related risks and controls E-payables systems Procurement cards Ethical issues related to expenditures processes Corporate governance in expenditures processes Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? .
