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Group 6:

Abobo, Danah Mae P.


Dalligos, John Enoch M.
Olarte, Leika Gay S.
Orfiano, Florence V.
EXPENDITURE
CYCLE
PROCESS
Expenditure Cycle Process

A. Purchases Processing Procedures

1. Monitor Inventory Records


The warehouse manager checks the notebook
containing the quantity of raw materials still available
in the warehouse. When the manager saw that the
quantity of raw materials are currently at a low level,
two copies of order list is prepared, one is given to
the purchasing manager while the other copy is filed
for reconciling purposes.
Expenditure Cycle Process

2. Prepare Purchase Order


The purchasing manager authorizes the
purchase of the raw materials through contacting
the vendor of the inventories. The order list which
is originally prepared by the warehouse manager
is given to the vendor.
Expenditure Cycle Process

3. Receive Goods
The warehouse manager receives the goods
and the bill from the vendor. The warehouse
manager conducts physical count and inspection of
the goods and reconciles the quantity received from
the order list filed in the warehouse department. The
bill is given to the purchasing manager for the
preparation of payment.
Expenditure Cycle Process

4. Update Inventory Records


The warehouse manager updates the
notebook of raw materials based on the official
receipt given by the vendor.
Expenditure Cycle Process

B. Cash Disbursement System

1. Identify Transactions To Be Paid


The bill given by the warehouse manager
serves as the prompt of the purchase manager to
prepare the money to be paid to the vendor.
Expenditure Cycle Process
2. Prepare Cash Disbursement
The purchasing manager will review bill and
will be the one to authorize the payment. The
purchasing manager will get the payment from the
cash on hand. If the cash is not enough, the
purchasing manager will withdraw from the bank.
The cash will be given to the warehouse manager
and will be the one to pay the vendor.
3. Update Record
After the payment, the sales manager will
record the payment on the notebook.
DOCUMENT
FLOWCHART
INTERNAL
CONTROL
Internal Control
1. Warehouse Department
- Warehouse manager is responsible in checking the
notebook containing the quantity of raw materials still
available in the warehouse. When the manager saw that
the quantity of raw materials are currently at a low level,
he will make copies of order list to be given to the
purchasing department. If the warehouse manager is
absent, the worker will be the one to do it.
- Upon receiving the goods, the manger reconciles the
goods received with the order list to see if there are
damaged goods or incorrect items delivered.
- The cash will be given to the warehouse manager and
will be the one to pay the vendor.
Internal Control

2. Purchasing Department
Purchasing manager is the one who authorizes
the purchase of raw material and the payment to be
made. She is also responsible in recording the
purchase and cash disbursement transaction.
Internal Control

3. Cash Control
The purchase manager has the control over
cash. For purchasing purposes, there is always a
certain amount of cash on hand to be used as neede
d. The cash on hand is kept by the manager in a
cabinet which has a lock. If the cash on hand is not
enough, the purchasing manager is the only one
authorized to withdraw cash from the bank.
Internal Control

4. Inventory Control
The warehouse manager has the custody on
the inventory and is also the one responsible for
the recording in the inventory notebook. Updating
of inventory records generally happens on a
weekly basis, but it may also depend on the
demand of goods.
STRENGTHS
WEAKNESSES
AND
RECOMMENDATIONS
Strengths
1. The warehouse manager checks the availability
of the raw materials in the warehouse before prep
aring the order list.
This avoids excessive inventory being ordered
which may cost the entity a huge amount of
handling cost.

2. The warehouse manager inspects and counts


the goods received.
This reduces the risk of accepting incorrect items,
damaged goods and/or incomplete orders.
Strengths

3. There is a segregation of duties.


Custody of the inventory is being done by the
warehouse manager while the recording of cash
disbursement and authorization of purchase is
being done by the purchasing manager.
Weaknesses and Recommendations
Group 6:
Abobo, Danah Mae P.
Dalligos, John Enoch M.
Olarte, Leika Gay S.
Orfiano, Florence V.