Question

What are the swimlanes in this problem?

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 or a description of the process.

Hint: Follow the process described in the videos - Rough out the process on paper then use Excel to produce the final flowchart. Mr. Butts doesn’t mention it to Cathy, but the company uses SAP as its ERP system; from creating P.O.’s to printing checks.

Interview Transcript

Mr. Butts, I’m Cathy Apple from internal audit. Thanks for meeting with me.

Cathy, please call me Seymour. What can I do for you?

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.

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 P O file. Then when Billy 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 P O and send us this marked up copy as a receiving report. We also manually file the receiving reports. When we get invoices from the vendors we then match them to the PO and the receiving report and resolve any discrepancies. Once we have a three way match we approve the invoice.

When do you update payables?

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.

When do you relieve the payables?

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?

Persistence.

You mean your initials are C.P.A.?

Answer 1

Flow Chart of Accounts Payable Process –The accounts payable cycle consist of multiple process . Major component include in this process includes PO ( purchase order) === receiving material ( Quality review ) == and Vendor payment on the basis of invoice

At the time of purchase / procuring any material – Job first start from procurement department . This department will create PO ( purchase order) and send it to vendor . Before selecting vendor , this department will do comparative Quotation analysis at elast with three vendor . After complete this selection process , they selected final vendor and send system generated PO ( with all details – material description, Quantity , Price , Tax component + payment Terms )

While receiving goods from vendor , receiving department will verify all material IN as per PO and other terms and condition . Quality Team will check whether item matched with their Quality parameter

Vendor will send sends a vendor Invoice requesting for payment relates to goods or service rendered . On the basis of Vendor Invoice , Accounts team will accounted vendor payable and pay off after several authorization

After receiving the vendor Invoice , Accounts department need to check following points :

1. Purchase order Item and other details should match with receivibg department details along with Quality department OK to Go confirmation
2. Accounts payable employee is responsible for entire payment process
3. Accounts payable team do all checks and balances before releasing final payment to Vendor

Under account payable process , need to look into :

1. What the company ordered
2. What company received
3. All Unit , Quantity , rate per unit , pricing method , Shipment details