1. Chapter 9 THE ACQUISITION CYCLE— PURCHASING AND RECEIVING

2. Accounting Application and Modules
Purchasing module
Sales lodule
Inventory module
General ledger module
Payroll module
Jobs/projects module

3. Processing Modes 4 covered in this text:
Immediate recording with immediate updating: real-time processing
Batch recording (on-line)
Off-line entry with batch recording
Immediate recording with batch updating

4. Using Accounting Applications : Additional Issues
Posting to General Ledger
Purging

5. Overview of the Purchasing and Receiving Functions
Documenting the process:
Identification of events
Annotated narrative
Workflow table
Overview and detailed activity diagrams
Documenting data design:
Events and tables used
UML class diagram
Record layouts

6. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Execution risks
Recording risks
Controls over purchasing and receiving

7. Overview of the Purchasing and Receiving Functions
Risks and controls in
purchasing and receiving:
Types of workflow controls
Segregation of duties
Use of information from prior events
Required sequence of events
Follow-up on events

8. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Types of workflow controls
Sequence of prenumbered documents
Recording of internal agents accountable for an event
Limitation of access to assets and information
Reconciliation of records with physical evidence

9. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Types of input controls
Establish a primary key
Use drop-down or look-up menus
Scan data
Check record for consistency with that entered in a related table
Confirm entered data by comparing with another table

10. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Types of input controls
Use referential integrity controls
Format checks to limit data entered
Rely on validation rules to limit the data that can be entered
Use defaults from data entered in prior sessions

11. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Types of input controls
Prohibit leaving a field blank
Use computer-generated values for records
Prompt users to accept/reject data
Compare batch control totals before data entry to printouts after data entry

12. Overview of the Purchasing and Receiving Functions
Risks and controls in purchasing and receiving:
Types of input controls
Review edit report for errors before posting
Examine exception reports listing overrides of defaults or entry of unusual values

13. Overview of the Purchasing and Receiving Functions
Application menu for purchasing and receiving:
Maintain supplier, inventory, or employee
Record requisition, purchase order, or receipt
Display/print reports
Query
Exit

14. Using Accounting Applications: Purchasing and Receiving
Supplier table maintenance:
Data entry screen and record layout
Using supplier file maintenance to control execution risk
Unauthorized goods or services received: purchase was from wrong supplier
Wrong quantity, quality, or price

15. Using Accounting Applications: Purchasing and Receiving
Supplier table maintenance:
Using supplier file maintenance to control recording risks and improve recording efficiency
Wrong external or internal agent recorded
Efficiency
Controls over supplier maintenance

16. Using Accounting Applications: Purchasing and Receiving
Inventory table maintenance:
Data entry screen and record layout
Using inventory file maintenance to control execution risk
Wrong type of product or service received
Wrong quantity, quality, or price

17. Using Accounting Applications: Purchasing and Receiving
Inventory table maintenance:
Using inventory file maintenance to control recording risks and improve recording efficiency
Wrong type of product or service recorded
Wrong quantity or price recorded
Efficiency
Controls over inventory maintenance

18. Accounting Applications and Controls: Recording Data in Transaction Tables
Record requisition:
Data entry screen and record layout
Requisitions and recording risks
Recorded a requisition that never occurred
Requisition not recorded at all, recorded late, or unintentionally duplicated

19. Accounting Applications and Controls: Recording Data in Transaction Tables
Record requisition:
Requisitions and recording risks
Errors in recording data items - Wrong:
Product or service;
Quantity or price;
Supplier, requestor, or supervisor;
Recording other data stored in event records
Additional controls
Requisitions and execution risks

20. Accounting Applications and Controls: Recording Data in Transaction Tables
Prepare purchase order (PO):
Data entry screen and record layout
Purchase orders and recording risks
Recorded PO that never (should have) occurred
PO not recorded at all, recorded late, or unintentionally duplicated
PO data items not accurate
Purchase orders and execution risks

21. Accounting Applications and Controls: Recording Data in Transaction Tables
Receive goods:
Data entry screen and record layout
Receiving and execution risks
Wrong type or product or service received
Wrong quantity, quality, or price
Receiving and loss of assets
Receiving and input controls

22. Accounting Applications and Controls: Recording Data in Transaction Tables
Additional comments:
Matching controls with risk in the purchasing and receiving processes
Acquisition of services

23. K E Y T E R M S
Purchase order
Purchase requisition