Question

You are Cathy Apple, internal audit and your task is to produce the flowchart of the accounts payable process. Review the attached transcript of your interview with the manager for a description of the process. Hint: Follow the processes described in the videos - Rough out the process on paper then use Excel to produce the final flowchart. Mr. Kluber doesn’t mention it to Cathy, but the company uses SAP as its ERP system, from creating purchase orders to printing checks. Interview Transcript CA: Mr. Kluber, I’m Cathy Apple from internal audit. Thanks for meeting with me. CK: Kathy, please call me Cy. What can I do for you? CA: I need to document the accounts payable process. I know that before we approve a vendor’s invoice for payment we have to complete the vouchering process but I am a little unclear on the details. CK: I think I can help you. First Pam in the purchasing department creates the purchase order in our ERP system and sends the purchase order to a supplier. She also files a copy for her use and sends us a copy in AP. She sends the final copy to the warehouse. We manually file it in an open purchase order file. Then when Trevor in the warehouse receives goods from suppliers he checks them in, updates inventory in the system, notes the quantities actually received on his copy of the purchase order and sends us this marked up copy as a receiving report. We also manually file the receiving reports. When we get invoices from the vendors we match them to the purchase order and the receiving report and resolve any discrepancies. Once we have a three-way match we approve the invoice. CA: When do you update payables? CK: Once the invoice is approved we enter the payable in the system. We print checks once a week. Sally, the controller, reviews and signs the checks. We staple a copy of the check to the voucher packet and file it. We also mail the check to the vendor. CA: When do you relieve the payables? CK: Once we mail the checks we update the payable in the system to show that it has been paid. Cathy what is your middle name? CA: Persistence. CK: You mean your initials are C.P.A.?

Answer 1

Flowchart of Accounts Payable process

Creation of Purchase Order by Purchase Dept • In Quadruplicate ( 4 Copies) • 1 to self, 1 to Supplier, 1 to AP, 1 to Warehouse Goods receipt Goods Received by Warehouse Update Inventory System compare the quantities received with the quantities ordered in PO Preparation of receiving report • In duplicate Send 1 copy to AP Vendor Invoice 3 Way Match • Compare PO, Receiving Report and Invoice for Accuracy • Report any descrepancies Vouchers and Payment invoice approval and enter in payable •make payment