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47 Cards in this Set

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  • Back
What does Inventory control do?
initiate requisitions, maintain inventory subsidiary ledger
what does purchasing do?
(authorization) - select vendors, prepare POs, maintain and monitor OPEN P.O. file
What is Receivings' job?
(custody) -accept goods from supplier, prepare receiving document
What does Storeroom or warehouse do?
(custody)- maintain custody of goods
What does accounts payable do?
(recordkeeping)- maintain unmatched PO file as contro over purchasing and to identify unrecorded transactions, matching of supporting documentation (vouchering), record in voucher register
What does the Cash Disbusements/cashier do?
(custody)- write checks,maintain check register, cancel supporting documents so they can be used to support a fradulent transaction
Name the six Expenditure cycle documents.
purchase requisition, purchase order, receiving document, vendor's invoice, voucher, check
Solve: A purchasing clerk orders materials from his brohter-in-law who does not provide the best price.
purchasing agents must complete conflict of interest disclosures; competitive bids should be obtained for items to be purchased
Solve: A purchasing clerk places an order with a vendor from who he obtains a "kickback".
Competitive bidding process, and a review of bids by purchasing supervisonrs
Solve: A second copy of a vendor's invoice for goods is accidentally paid.
Each invoice must be vouchered--matched with a requisition, P.O. and receiviing document
Solve: A second copy of a vendor's invoice for goods is accidentally paid.
Route invoice to person authorizing service for approval prior to vouchering
Solve: An A/P clerk detaches a P.O. and receiving document off of a paid voucher and uses them to support a fraudulent invoice.
Invoice and other supporting documents should be cancelled, i.e., stamped paid by the party preparing the check.
Solve: A vendor's invoice overcharges for goods purchased due to an improper price
During the vouchering proccess, the A/P clerk compares the price on the invoice to the authorized price on the P.O.
Solve: A vendor's invoice overcharges for goods purchased due to extension and/or addition errors on the invoice
During the vouchering process, the A/P clerk rechecks the extensinos (price x quantity), totals, tax, and shipping charges on the invoice
An invoice is misplaced and not vouchered on a timely basis. As a result, the company loses out on a significant payment discount for not paying wihtin the discount period
A/P maintains an unmached document file which is reviewed daily to determine if any documents are missing
Receiving/storeroom personnel get in a hurry and just write on the receiving document the amount shown on the P.O. as the amount received when actually fewer goods were received.
Send a "blind" copy of the P.O. to receiving--the quantities are omitted, to force them to perform an accurate count.
Receiving clerks accept a shipment of goods that were not enven ordered by the company.
The receiving department must have a P.O. on hand before thaey can accept a shipment.
Solve: An accounts payable clerk embezzles by recording a non-existent invoice in the Voucher Register and then cuts a check for that invoice
Accounts payable (record-keeping) functions should be segregated from check generation (custody funcitons)
Solve: A cashier embezzles funds by writing a check to themselves or a fictiious company and they do not record it in the Check Register
Since the check clears the bank, but is not on the books, an independent party reconciling the bank statement will detect this embesslement
Solve: A cashier embezzles funds by writing a check to themselves or a fictitious company and they do record it in the check register.
The General Ledger A/P account will disagree with A/p subsidiary ledger
Receiving department personnel steal inventory and then claim it was sent to the warehous
The warehouse clerk must count the goods and sign a copy of the receiving document relieving the receiving clerk or custodial responsibility.
Solve: Inventory is being stolen by warehouse clerks
Perpetual inventory recors should be maintained and the records periodically compared with inventory actually on hand.
Solve: Tlhe purchasing clerk orders more items than are need from a vendor resultin in excess warehousing, insurance, and interest costs.
The use of an inventrory model such as EOQ which determines the order quantitiy that minimizes total carrying and ordering costs or the use of MRP (material requisition planning) depending on the nature of the biz.
Solve: A inventory control clerk fails to order needed merchandise and as a result the firm suffers significant lost sales from being out of stock.
Use an inventory model, such as Reorder Point system, which based on usage rate, lead time , and safety stock, identifies at what point the goods are to be ordered.
Solve: A purchasing clerk enters the wrong Vendor # for goods bieng ordered. Now there are out of stock problems, due to late recognition.
Closed-loop verification; or the primary and secondary vendors should alrady be attributes in the inventory record for each item
ordering errors, i.e., non-optimal order quantities, ordering too late, ordering from wrong vendor
Computer applications, will basically perform the job of the inventory control clerk. If here is stability in the EOQs then the program might automatically generate the P.O.
Solve:Ordered materials do not arrive on time and force costly rescheduling of production runs.
The purchasing department maintains an open purchase order file which is reviewed daily. In a computerized system and Open Purchase order will be generated and reviewed daily by the purchasing department
Solve: Purchasing continues to order from vendors who ship goods late and/or large numbers of defective items
Vendor Performance Report needs to be produced periodically and reviewed, containing: % shipments late, average days late, % of defective items, %of shipments with billing errors
What functions are replaced when changing from a manual purchasing/receiving system to an online computerized purchasing system?
Inventory control, since primarily a posting process
What is the Reorder Report?
used by purchasing to determine what, when, and how much to order
Open P.O. report functions?
used by purchasing to monitor the status of an outstanding order
Vendor peformance report?
used by purchasing in detemining vendor selection
A/P Report (Invoices Due)?
used by Treasureer to forecast cash flows
Expense Analysis?
used by Controller to control expenses
Order of stages in development process
Planning
Analysis
Conceptual Design
Physical Design
Implementation
Operation
Techniques used to survey existing system?
interviews, questionnaires, system flowcharting, review of system documentation
Types of feasability
technical- hardware/software obtainable; economic- is the project affordable given current budget constraints, do estimated benifits exceed estimated costs, operational- can the proposed system be practically implemented
"Physical to physical"
Go from system flowchart of existing model(physical) to DFD's Hierarchical charts (Logical) to DFD's Hierarchical charts of new system to physical model of new system
What is the order of physical design steps?
Output Design (reports), database design (produce), source documents (capture)- control design is done throughout the process
What are the alternatives for converting form the old system to the new system?
Parallel approach, Direct (cold turkey approach), Modular Approach
Parallel Approach
use both old and new system for one month and compare results
Direct (cold turkey) approach
stop using old system at end of one period and start using new system the next period; obviously the riskiest approach
Modular approach
implement new system one subsystem at a time; can be used in combination with either of above two approaches
Different Types of Maintenance
corrective, perfective, and adaptive
Corrective maintenance
to fix errors (17% of maintenance costs)
Perfective maintenance
to improve performance of an application (60%)
Adaptive maintenance
adjust applications to meeet changing business needs (18%)