Supervised by : Dr. Yousif Shahwan

IntroductionThe expenditure cycle is a recurring set of business activities and related data processing operations associated with the purchase of and payment for goods and services.

The four basic business activities performed in the expenditure cycle are:1. Purchasing2. Receiving3. Accounts payable4. Treasury

WeaknessesPurchasing deptA pre-numbered purchase order is processed, with the original sent to the supplier and copies to the department head, receiving, and accounts payable.Once a month, the buyer reviews the unfilled file to follow up on open orders

WeaknessesReceiving dept.No weaknesses were found instead we encountered strengths.

Strengths:-The receiving department gets a copy of each purchase order.The purchase order copy is stamped with the date of the purchased equipments.Any differences between the quantity ordered and the quantity received are noted in red ink.

WeaknessesAccount payableUnpaid invoices are filed by due date. On the due date, a check is prepared and forwarded to the treasurer for signature.When a vendor invoice is received, it is matched with the applicable purchase order, and a payable is created by debiting the requisitioning department's equipment account.

WeaknessesTreasurerBoth cashier and treasurer sign all checks over $ 10,000.

RecommendationsEDI (electronic data interchange)EFT (electronic fund transfer)Online and real time processingJIT system (Just in time)Segregation of dutiesVacation mandatory ruleCountercheck

EDI (electronic data interchange)It is essentially used to improve and meliorate the purchasing department.

cuts down costs

main function is that its used to transfer electronic documents from one computer system to another

EFT (electronic fund transfer)

Amends the purchasing department.

computerized system that is used to transform any financial transaction electronically

eliminate the any postponements associated with the time the remittance is in the mail system

Online and real time processingPurchasing , receiving and accounts payable dept.

Immediate updating as each transaction occurs

more efficient and accurate for processing data

Real time processing ensured that stored information is always current, thereby increasing its usefulness for making decisions.

JIT system (Just in time)

enhances efficiency in the receiving dept.

minimize, if not totally eliminate

ensures that a factory using a JIT system will have a multiple receiving docks

Segregation of duties

In general, the following functions should be separated among employees:ApprovalAccounting/reconcilingAsset custody

Segregation of duties must be performed in all four departments to ensure that no fraud is committed.

Vacation mandatory rule

It can be used in all departments.

devoting an employee a holiday so you can assure whether there are any frauds or embezzling of cash

Countercheck

Double-check invoice accuracy

training of accounts payable staff

used to control the weaknesses in the treasury as well

Document flow chart

DFD

DFD

Accounts payable dept.

DFD

ConclusionThe Control procedures distinguished in the report can significantly reduce and lessen the amount of weaknesses and could exert a proper internal appropriation of assets as well as inventory.however, no system of internal controls can ever be unfailing.one set of control is not a good fit for all types of commissions.

*