Expenditure Cyle
The Expenditure Cycle is a recurring set of business activities and related information processing operations associated with the purchase of and payment for goods and services.
The primary external exchange of information is with suppliers (Vendors).
Information about the need to purchase goods and material flows to the expenditure cycle from the revenue and production cycles, inventory control, and various departments.
Once the goods and materials arrive, notification of their receipt flows back to those sources from the expenditure cycle.
The primary objective in the expenditure cycle is to minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function.
6 decisions to accomplish this objective (PAGE 216)
To answer these decisions 4 basic expenditure cycle activities 1. Ordering material, supplies and services 2. Receiving materials, supplies and services 3. Approving supplier invoices 4. Cash disbursements
Expenditure Cycle Information System
Process
Most large organizations use an (ERP) enterprise resource planning system.
Threats and Controls
All expenditure cycle activities depends on the integrated database that contains information about suppliers, inventory, and purchasing activities.
The first general threat is inaccurate or invalid master data. One way to mitigate this threat or inaccurate or invalid master data is to employ data processing integrity controls. 1. Restrict access to expenditure master data
The second general threat in the expenditure cycle is unauthorized disclosure of sensitive information, such as banking information about suppliers and special pricing discounts offered by preferred suppliers. One way to mitigate the risk of this threat is to configure the system to employ strong access controls that limit who can view such information.
The third general threat in the expenditure cycle concerns the loss or destruction of master
The primary external exchange of information is with suppliers (Vendors).
Information about the need to purchase goods and material flows to the expenditure cycle from the revenue and production cycles, inventory control, and various departments.
Once the goods and materials arrive, notification of their receipt flows back to those sources from the expenditure cycle.
The primary objective in the expenditure cycle is to minimize the total cost of acquiring and maintaining inventories, supplies, and the various services the organization needs to function.
6 decisions to accomplish this objective (PAGE 216)
To answer these decisions 4 basic expenditure cycle activities 1. Ordering material, supplies and services 2. Receiving materials, supplies and services 3. Approving supplier invoices 4. Cash disbursements
Expenditure Cycle Information System
Process
Most large organizations use an (ERP) enterprise resource planning system.
Threats and Controls
All expenditure cycle activities depends on the integrated database that contains information about suppliers, inventory, and purchasing activities.
The first general threat is inaccurate or invalid master data. One way to mitigate this threat or inaccurate or invalid master data is to employ data processing integrity controls. 1. Restrict access to expenditure master data
The second general threat in the expenditure cycle is unauthorized disclosure of sensitive information, such as banking information about suppliers and special pricing discounts offered by preferred suppliers. One way to mitigate the risk of this threat is to configure the system to employ strong access controls that limit who can view such information.
The third general threat in the expenditure cycle concerns the loss or destruction of master