ACCOUNTING INFORMATION SYSTEMS BASIC CONCEPTS & CURRENT ISSUES Chapter 9 Acquisition / payment process McGraw-Hill/Irwin Accounting Information Systems © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

Porter’s value chain 8-2

9-3 Acquisition / payment steps 1.Request goods / services based on monitored need 2.Authorize a purchase 3.Purchase goods / services 4.Receive goods / services 5.Disburse cash 6.Process purchase returns as necessary

9-4 Documents Purchase requisition Purchase order Receiving report Invoice from Vendor Check (to vendor)

9-5 Documents Purchase requisition Requests that the purchasing department order goods / services Originates in an operating department Terminates in the purchasing department Purchase order Specifies items ordered, shipping terms and other information about the purchase Originates in the purchasing department Terminates with vendor

9-6 Documents Receiving report Ensures that ordered goods have been received in good condition Originates in receiving department Terminates in various departments Vendor invoice Requests payment from buying organization Originates with vendor Terminates in accounting department of buyer Check Pays the vendor Originates in accounting Terminates with vendor

9-7 Internal controls Inventory monitoring system Justification for unusual goods Conflict of interest policy Criteria for supplier reliability and quality of goods Strategic alliances

9-8 Internal controls Document matching Receiving reports with purchase orders Receiving reports and purchase orders with invoices Insurance and bonding Internal audit department

9-9 Internal controls Separation of duties: custody, recordkeeping, authorization Employee monitoring systems “Paid” stamps Information technology, such as radio frequency identification (RFID)

9-10 Information technology Online vendor payments Bar codes Vendor lists Inventory status checks Transaction recording in the AIS

9-11 Acquisition / payment steps Inventory database Inventory information 1.0 Requisition inventory. 2.0 Prepare purchase order. Requisition data Vendor database Vendor information vendor Purchase order 3.0 Receive inventory. Order information Receiving information 4.0 Disburse cash. Authorization information A / P database Payment information Purchase information