team b paper - CONTROLS FOR OUTFLOWS 1 Controls for...

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CONTROLS FOR OUTFLOWS 1 Controls for Outflows Tamara Bryan, Heather Hall, Randi Padavano, R'Thasia Terrell ACC544 August 8, 2011 Bunney Schmidt
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CONTROLS FOR OUTFLOWS 2 Controls for Outflows There are many errors that can be found within a financial statement, but the most common would stem from improperly recording costs and expenses. Payroll, accounts payable, and cash disbursements are the most common types of fraud. Controls for outflows in purchasing, accounts payable, cash disbursements, finance, investment, and payroll will prevent errors and fraud. The following proposal recommends and explains these controls in detail and describes the importance of the controls for each area. Controls for Accounts Payable and Cash Disbursements It is important to have internal controls in place for the accounts payable and cash disbursements functions to ensure that bills are paid and processed properly. One of the most important internal controls that a company should have in place is the separation of duties to protect the company from fraud or embezzlement (Louwers, Ramsay, Sinason, & Strawser, 2007). One person in the accounts payable department should receive the invoices from the vendors and compare the invoices with the receiving and purchase order documents to make sure the prices and quantities match. This person should also check to make sure that the signatures on the supporting documents are from the appropriate employees and that the purchases were authorized by checking for a purchase order number as well as the signatures (Department of Health & Human Services, 2008). The accounts payable clerk should stamp the invoice with the received stamp and initial the invoice verifying that it was checked and everything is correct. If there are any discrepancies between the three documents, they should be investigated before entering the invoice into the system. If the documents match, they should be sent to the next person in the accounts payable department to be entered in the system for payment. The next person in the accounts payable
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CONTROLS FOR OUTFLOWS 3 process should enter the invoices into the system after checking to make sure the supporting document as described above is attached to the invoice and that the invoice has been initialed by the previous clerk (Louwers et al., 2007). When entering the invoice into the system, there should be controls in place that require the customer number, invoice number, date of the invoice, the purchase order number, and the specific amounts for each item on the invoice to be entered before allowing the clerk to post the invoice. There should be a control in place that does not allow duplicate invoice numbers or purchase order numbers to be entered without a manager’s approval and password being entered into the system. The manager should not approve transactions when this occurs until researching to see if the same invoice has been paid previously or if the purchase order number has been already used. This will help avoid duplicate
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This note was uploaded on 12/15/2011 for the course ACC ACC taught by Professor Mari during the Fall '10 term at University of Phoenix.

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team b paper - CONTROLS FOR OUTFLOWS 1 Controls for...

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