Chapter 11 Auditing The Purchasing Process 1
I. Expense and liability Recognition. II. Overview of the purchasing process III. Types of Transactions and Financial Statement Accounts Affected IV. The Major Functions V. The Key Segregation of Duties VI. Inherent Risk Assessment Contents Chapter 11 2
I. Expense & Liability Recognition: Chapter 11 3 Expenses are defined as: “Outflows or other using up of assets or incurrences of liabilities from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major or central operations.” Liabilities are defined as: “ Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.
II. Overview of the Purchasing Process A purchase transaction usually begins with a purchase requisition generated by the user department. The purchasing department department. The purchasing department prepares a prepares a purchase order that is sent to the vendor. When the goods are received or the goods are received or the services rendered, a services rendered, a
- Spring '16
- Supply chain management terms