CHAPTER 11 COMPUTERISED ACCOUNTING SYSTEMS

OBJECTIVE TEST 1.What assets make up the cash and cash equivalents line item on the SFP? 2.What statement analyses a change in cash flows? 3.Explain what a stop order is? 4.Explain what an EFT is? 5.What is a bank reconciliation?

OBJECTIVE TEST- ANSWERS 1. Assets that are readily convertible into cash 2.The statement of cash flows 3.Stop order agreements allow the entity’s bank to recover, on certain date of every month, the stop order amount from the customer’s bank 4.Electronic transfer of funds are payments made by making use of the bank’s electronic banking services. These payments are made directly from one cheque account to another. 5.Document used to reconcile two related amounts that should be the same on a specific date.

BACKGROUND ACCOUNTING SYSTEMS An Accounting system is centrally uploaded onto a server and is accessible through the keyboards of desktops that are distributed throughout the entity. Access is mainly limited to staff members of the financial division. These staff members must first register on the accounting system in order to obtain unique user name and an 8 character alphanumeric password. Access rights are then assigned to each user name. Users access to certain areas within the system may be restricted. The CFO, Financial director and head accountants within the entity will have access to all areas within the system.

ORGANISATIONAL STRUCTURE- FINANCIAL DIVISION Financial Director CFO Head accountant Internal audit

DOCUMENT FLOW-PLACING AN ORDER Sales division will place a purchase requisition with the purchases department. What is a purchase requisition? A document sent to the purchasing department notifying them of items it needs to order. The document will detail what needs to be ordered, the quantity that needs to be ordered, How soon they need this order by etc.

PURCHASE REQUISITION

PAYABLES DIVISION Clerks within the payables division responsible for: Attach to each invoice received- order form,GRN and delivery note. Confirm the accuracy of the detail on the invoice. They perform payables reconciliation between the statement from the payable and the payables account Recognise transactions Identify invoices that are payable. As soon as an invoice becomes payable the clerk completes a “request for payment” requisition. The requisition must be authorized before payment can be made.

REQUEST FOR PAYMENT Who is responsible for complete a “request for payment” requisition? Payables clerk. What needs to be completed on such requisition? Date of payment Detail of payable The amount to be paid Invoice number

REQUEST FOR PAYMENT REQUISITION

INVENTORY- STORE DIVISION Function of this division: Take delivery of goods Maintain inventory records Provide goods with sales price tags Issue goods to the sales room Preform stock counts Notify staff member of GL of any shortages in inventory in order for a journal to be processed

HOW TO RECORD Inventory clerk will capture the detail and quantities of goods received with reference to a GRN What is a GRN? Document of goods received at the point of delivery/receipt. This document is used to confirm all goods that have been received Inventory clerk will capture the price of goods received with reference to a suppliers invoice If a requisition for goods is received by the sales department and the requisition has been approved The goods may be transferred to the sales room.

SALES DIVISION Function of staff member in the sales division: Customer services Sending statements Issuing requisitions to the order and store division Credit manager establishes a credit limit for customers Why should a credit limit be established? To ensure probability of receipt of payment from debtors

INFORMATION RELATING TO EMPLOYEES Templates are completed and the following will be captured: Biographical information Remuneration benefits Leave and sick leave taken Promotions, resignations or retirements Why does this need to be captured? Internal control tool to reduce risk of fictitious employees, preventing fraud

EFT PAYROLL A payroll is prepared monthly using the information of staff members as obtain from the HR records The system also prepares an EFT payment instruction for the payment of the NET remuneration to each employee The head of the payroll division is responsible for reviewing the payroll to ensure its completeness and accuracy Once the EFT payment instruction has been authorized the payment can take place as well as the recording of the transaction

STATISTICS- PAYROLL FRAUD Payroll Fraud happens in 27 percent of all businesses Payroll fraud occurs nearly twice as often (14.2 percent) in small organisations with less than 100 employees than in large ones (7.6 percent). The average instance of payroll fraud lasts about 36 months. That’s three years of paying ghost employees or overpaying existing ones