 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 1 Chapter 8 Procurement and Human Resource Business Processes

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 2 Learning Objective 1 Describe the procurement business process.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 3 Overview Procurement is the business process of selecting a source, ordering, and acquiring goods or services. Obtained internally Purchased

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 4 The Procurement Business Process Requirementdetermination Selection of source Request for quotation Selection of a vendor Receipt of the goods Invoiceverification Vendorpayment Issue purchase order

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 5 The Procurement Business Process ERP (enterprise resource planning) systems are capable of storing and processing a vast amount of information pertaining to the procurement business process.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 6 The Procurement Business Process SAP R/3 supports procurement in its materials management module. Documents in R/3 are “online documents.” Documents may also be printed and exchanged manually.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 7 The Procurement Business Process Purchase requisition Request for quotation Quotation Purchase order Outline agreements Contracts Schedulingagreements Purchasing information records

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 8 The Procurement Business Process All procurement documents are assigned a document type code. This code determines the fields that are displayed on video screens. It also controls the range of unique numbers that are assigned to particular document types.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 9 Master Records Master records are created in R/3 for the “objects” that reflect the organizational structure and business processes of the company. The coding system incorporates fields that identify company, plant, storage location, purchasing organization, and purchasing group.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 10 Inventory Management The IM component of R/3 records both the value and quantity of inventory. Enter and check goods movement. Manage inventory stocks. Take a physical inventory.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 11 Learning Objective 2 Illustrate controls that apply to procurement.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 12 Stores (Requisitioning) Preparerequisition Requisitionprocessing Purchaserequisition Purchasing Purchasedatabase Goodsreceiptprocessing Receivingreport Accountspayable Delivery Receivingreport Verifygoods Receiving

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 13 PurchasingVendor Purchaseorder Vendor Purchasedatabase Invoice Invoiceverification invoice Accountspayable Prepareorder Orderprocessing Selectvendor Purchaserequisition Competitive bidding

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 14 Receiving Blindcount Delivery Stores Enterreceipt Orderprocessing Purchase database Receivingreport Stores Match to purchaseorder Vendor Delivery

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 15 Accounts Payable Purchaserequisition Purchaseorder Receivingreport Invoice Retrievedocuments Purchasedatabase JournalvoucherVoucherVouchercheck Cash disbursements Voucherprocessing AccountspayableVoucherregister General ledger PreparevoucherOnduedate

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 16 Cash Disbursements Accountspayable Voucher Vouchercheck Post Checkregister GeneralledgerForward direct to payee Cancelvoucheraftersigningcheck Signchecks VoucherVouchercheck ControltotalVouchercheck

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 17 General Ledger Controltotal Comparepost Journalvoucher Generalledgerprocessing Journalvoucher Controltotal Accountspayable Generalledger Cashdisbursements

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 18 Internal Audit Bank Cancelledchecks Bankreconciliation Checkregister Bankstatement Independent of cash disbursements Bankreconciliation

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 19 Additional Control Features Purchasing does not control the actual goods. Receiving is separate from final custody of the delivery. Accounts payable handles only documents. Purchase requisitions should be independently reviewed.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 20 Integrity of the Procurement Business Process Purchase orders and receiving reports control individual purchases. They do not directly exercise control over the procurement business process. Control centers on the integrity of the buyer-vendor relationship.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 21 The Attribute-Rating Approach to Vendor Selection The attribute-rating approach to vendor selection is appropriate whenever an objective evaluation of the opinions of several independent evaluators is desired.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 22 The Attribute-Rating Approach to Vendor Selection Identify and list the attributes to be included in the evaluation. Assign a weight to each attribute, based on relative importance and objectivity.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 23 The Attribute-Rating Approach to Vendor Selection Have individual evaluators rank each vendor on each attribute. Total the individual evaluations.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 24 Learning Objective 3 Describe the cash disbursements business process.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 25 Cash Disbursements Business Process Check disbursements Cash disbursement

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 26 Cash Disbursements Business Process What is an imprest fund? It is a fund maintained at a specified, predetermined amount. The imprest fund concept is not restricted to petty cash control. Imprest payroll funds and imprest charge or expense funds are common in systems design.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 27 Voucher Systems The major control features over disbursements are the use of a voucher system. It supports the drawing of checks, the separation of approval from payment, and an independent bank reconciliation.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 28 Voucher Systems Accounts payable Cash disbursements General ledger Internal audit

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 29 Voucher Systems The real control over disbursements is a final review of documents evidencing the entire transaction prior to the authorization for payment.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 30 Voucher Systems Physically signing off on a voucher package Preparing a document to authorize an entry in the voucher register Entering data into a computer device

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 31 Voucher Systems Accounts payable generally refers to trade accounts. A vouchers payable system encompasses all expenditures. Vouchers can take several forms, ranging from a simple form or envelope to a voucher-check combination.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 32 Voucher Systems When are invoices to be posted to vouchers payable? After invoices have been approved for payment, they may be held until the due date. They may be booked at the time of approval.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 33 Voucher Systems What are built-up voucher systems? These systems accumulate several invoices from the same vendor and pay them with a single check. Three files are necessary to maintain useful information.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 34 Voucher Systems 1. a file of approved but unpaid invoices 2. a file of paid invoices 3. a vendor file showing both paid and 3. a vendor file showing both paid and unpaid amounts, ordered by vendor ID

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 35 Learning Objective 4 Describe the human resource business process.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 36 Human Resource Management Business Process The HR system should provide tools for the setup and maintenance of information pertaining to the organizational structure. A listing of jobs that exist in an organization A listing of job descriptions A listing of any qualifications that are required for a job

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 37 HR Processing in SAP R/3 HR data is immediately available to anyone who has authorization to use it because HR data is online. The HR component can be implemented standalone or it can be integrated with other modules.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 38 HR Processing in SAP R/3 Personnel Administration module (HR-PA) Personnel Planning and Development module (HR-PD)

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 39 HR Processing in SAP R/3 Time Management Payroll Travel Expense

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 40 HR Data Structure The HR data structure contains three elements. HR master data HR data organization HR objects

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 41 Learning Objective 5 Illustrate controls that apply to payroll accounting.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 42 Transaction Cycle Controls in Payroll Processing Payroll processing is very complex. All levels of government impose payroll taxes. Regulations and rates are constantly changing. The payroll system requires frequent modifications.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 43 Transaction Cycle Controls in Payroll Processing Payroll processing is one area in which the law imposes not only a fine but a jail sentence for willful negligence in maintaining adequate records.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 44 Transaction Cycle Controls in Payroll Processing TimekeepingPayrollPersonnel Employee time cards Job time summaryAuthorization,notification Employee time cards Payrollregister Paychecks Authorization,notification Employee hiring, terminations, raises, and deductionsReconcile

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 45 Transaction Cycle Controls in Payroll Processing What is an independent paymaster? The person who distributes the pay is independent of personnel, timekeeping, and payroll preparation.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 46 Payroll Processing Requirements Numerous files must be maintained in a payroll system. What are some examples of these files? Basic employee information Payroll register or journal Government reports Tax tables

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 47 Payroll Processing Requirements Social security and other tax legislation impose several taxes based on payrolls. (FICA) old-age, survivors, disability, and hospital insurance Federal unemployment insurance State unemployment insurance Income taxes withheld

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood 8 – 48 End of Chapter 8