1. Routine purchases are initiated by inventory control notifying the purchasing department of the need to buy goods. The purchasing department fills out a prenumbered purchase order and gets it approved by the purchasing manager. The original of the five-part purchase order goes to the vendor. The other four copies are for …show more content…
Accounts payable maintains a list of employees who have purchase order approval authority. The list was updated two years ago and is seldom used by accounts payable clerks.
4. Prenumbered vendor invoices are recorded in an invoice register that indicates the receipt date, whether it is a special order, when a special order is sent to the requesting department for approval, and when it is returned. A review of the register indicated that there were seven open invoices for special purchases, which had been forwarded to operating departments for approval over 30 days previously and had not yet been returned.
5. Prior to making entries in accounting records, the accounts payable clerk checks the mathematical accuracy of the transaction, makes sure that all transactions are properly documented (the purchase order matches the signed receiving report and the vendor’s invoice), and obtains departmental approval for special purchase invoices.
6. All approved invoices are filed alphabetically. Invoices are paid on the 5th and 20th of each month, and all cash discounts are taken regardless of the terms.
7. The treasurer signs the checks and cancels the supporting documents. An original document is required for a payment to be