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

2. Outline Objectives Acquisition / payment steps Documents
Internal controls
Information technology
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

3. Objectives
When you finish studying this chapter, you should be able to:
Explain the role and purpose of the acquisition / payment process
List and discuss, in order, the steps in the process
Identify and describe documents commonly used in the process
Suggest and evaluate internal controls associated with it
Explain the role of information technology in the process
Create and interpret flowcharts and data flow diagrams
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

4. Acquisition / payment steps
Request goods / services based on monitored need
Authorize a purchase
Purchase goods / services
Receive goods / services
Disburse cash
Process purchase returns as necessary
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

5. 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
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

6. Documents Purchase requisition Purchase order
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
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

7. Documents Receiving report Vendor invoice Check
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
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

8. Internal controls Inventory monitoring system
Justification for unusual goods
Conflict of interest policy
Criteria for supplier reliability and quality of goods
Strategic alliances
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

9. Internal controls Document matching Insurance and bonding
Receiving reports with purchase orders
Receiving reports and purchase orders with invoices
Insurance and bonding
Internal audit department
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

10. Internal controls
Separation of duties: custody, recordkeeping, authorization
Employee monitoring systems
“Paid” stamps
Information technology, such as radio frequency identification (RFID)
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES

11. Information technology
Online vendor payments
Bar codes
Vendor lists
Inventory status checks
Transaction recording in the AIS
ACCOUNTING INFORMATION SYSTEMS
BASIC CONCEPTS & CURRENT ISSUES