INFS 7004 – Accounting Information Systems
The Expenditure Cycle – Interview Protocol The Australian National University | 1
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THE EXPENDITURE CYCLE – INTERVIEW PROTOCOL
The following questions are generally asked to gain an understanding about the company’s
business and the environment in which it operates.
First Level Questions:
The following questions are used to obtain data/information on the business background,
operations and information systems (environment, processes and controls).
1. Company profile – the following questions should allow you to identify: the core business
processes, the industry and market segment where the business operates, the business size,
strategy used (cost leadership / differentiation), whether IT strategy exists and aligns with the
business strategy.
a) The core business processes
b) Business Vision, Mission, and Strategy
c) IT Strategy
2. Standard Operating Procedures (which shows the process flowcharts and the departmental
functions) for Purchase to Payment Process which covers the following processes:
a) Procurement – Determine Demand for Goods + Order Goods processes
b) Goods Receipt – Receive Goods processes
c) Invoice Receipt / Accounts Payable Processing – Pay for Goods processes
d) Payment – Pay for Goods processes
3. The application system used for the above process:
a) If ERP:
| i. ii. iii. iv. |
what are the modules implemented; the version; any customisation; and provide the systems flowchart (if possible also showing the business rules) |
b) If not an ERP:
| i. | what is/are the application systems used to record transactions in each process within Purchase to Payment processes or the Expenditure Cycle; is/are the application(s) purchased, purchased modified, or developed in-house; the version (or last update); and provide the systems flowchart (if possible also showing the business rules), if many applications are used, also include the interface between each applications. |
| ii. iii. iv. |
4. The Operating System and Database used for the above process (including the version)
5. If system is down (system failure), which of the following is carried out?
a) The business operation heavily relies on the system, thus no business operation – in this
case, find out whether there are recovery procedures to determine possible length of
downtime period; or
b) Alternate manual procedures are performed until system is up again – in this case, provide
the Standard Operating Procedures on this activity if any.
INFS 7004 – Accounting Information Systems
The Expenditure Cycle – Interview Protocol The Australian National University | 2
© ANU COPYRIGHT. NO MATERIAL AVAILABLE FROM THE UNIVERSITY SITE MAY BE COPIED, REPRODUCED OR COMMUNICATED
WITHOUT THE PRIOR PERMISSION OF THE UNIVERSITY.
Second Level Questions
The following questions are raised once we have obtained the data/information in the first level
questions. However, we may not need to raise all questions to the company’s counterpart if 1)
the data in the first level questions are already clear, 2) based on our observation of the
data/information in the first level questions we notice that the questions are not relevant.
1. Purchasing/Procurement
a) Does Purchase Requisition (PR) have to be raised (mandatory) before Purchase Order (PO)
is created?
b) How is the order quantity defined? Any manual/system forecast used?
c) Is there any auto ordering (auto creation of PR/PO)?
d) Is PR creation segregated from the PO creation (i.e. PR is created by the user department
requesting the products and PO is created by the Buyer/Officer at
Purchasing/Procurement Department)?
e) How is a supplier selected?
| i. | The Purchasing/Procurement Department must place Request for Quotation (RFQ) to several suppliers and supplier is selected based on the lowest price; and/or Every product has been associated with a supplier (in the Inventory Master File), thus, the system will automatically define the supplier for each product ordered; and/or The Purchasing/Procurement Department has to manually select the supplier. If so, |
| ii. | |
| iii. |
then manual supplier selection is based on what (e.g. supplier history, performance
rate)?; or
| iv. | The Purchasing/Procurement Department has to hold a tender/bid and decide the best supplier. |
| f) | Does supplier selection process, in point e) above, require suppliers to be pre-approved (listed in the Supplier Master file)? If so, |
| i. ii. iii. iv. |
Who can maintain Supplier Master file? 1 How many suppliers do you have? Domestic or International or what is the proportion? How do you maintain relationship with any particular supplier/s? For example, do you rate their performance based on reliability (ability to deliver quality product accurately in timely manner) and quality of service (ability to respond to requests and issues to a satisfactory level in timely manner)? |
g) Is there any approval required for PR and PO? If any, is the approval online or manual? If
approval is online, any escalated/hierarchy of approval required (embedded in the
system)? If escalated/hierarchy of approval is required (in both manual and system) then
please provide the hierarchy2.
h) Is inventory/PR status updated to “ordered” once PO is created?
i) How do you place your PO? Online (e.g. by phone/fax, by email or via a computer system
such as through a website/ordering system, EDI or ERP) or manual hardcopy (e.g. in
person or via post)?
INFS 7004 – Accounting Information Systems
The Expenditure Cycle – Interview Protocol The Australian National University | 3
© ANU COPYRIGHT. NO MATERIAL AVAILABLE FROM THE UNIVERSITY SITE MAY BE COPIED, REPRODUCED OR COMMUNICATED
WITHOUT THE PRIOR PERMISSION OF THE UNIVERSITY.
2. Goods Receipt
a) Can the warehouse officer3 receive goods that do not have PO? Does the application
system allow goods receipt (GR) when the PO is not available?
b) Is blind PO used in goods receipt (GR) process?
c) What are the main things checked during the goods receipt process?
i. Quantity (Q): If Q delivered exceeds the Q ordered (PO), can the excess be
received? Does the application system allow GR if the Q received exceeds the Q
ordered?
| ii. | Condition: If wrong product/damaged/expired, is it returned? Does the application system allow incorrect goods to be received? What is the goods return procedure if goods are wrong/damaged/expired? Delivery Date: Overdue? Delivery received or returned? Can the warehouse officer |
| iii. |
receive overdue delivery of goods? Does the application system allow GR overdue
delivery (i.e. over than the promised delivery date stated in the PO)?
d) What identifies that GR has been completed (i.e. manual GR processing typically only
requires stamp/signature on PO document whereas system GR processing requires input
GR information to the system)? Is the status of PO updated from “open” (undelivered) to
“closed” (delivery completed)? If PO is still open,
| i. | Can partial delivery/multiple deliveries for a PO be received? Does the system allow that and can clearly identify whether all deliveries have been completed or not? Any procedures (manual or automated) to monitor open purchase order (i.e., long |
| ii. |
outstanding PO or PO that the goods have not been received by the promised
delivery date)?
e) How are duties during the goods receipt process segregated? (Hints: GR entry should be
done by Receiving Officer in the Warehouse. Double checking by other staff may be
required. Any exception should be authorised by its superior such as Receiving Supervisor
or Warehouse Head/Manager. Those who can do GR entry should be segregated from
those who can create PO or have physical custody of inventory or can dispatch goods).
3. Invoice Receipt /Accounts Payable Processing
a) Is ‘three-way matching’ mandatory (match invoice amount with GR quantity and PO
prices)? Is it performed manually or by system (system controls are enabled)?
b) Is there any price change process where Accounts Payable (AP) clerk may change/record
the price according to the invoice, which could be lower or higher than the price agreed
in the PO? Does the system allow price change?
c) Is there any approval required before AP are posted for payment? If yes, is the approval
online or manual? If approval is online, any escalated/hierarchy of approval required
(embedded in the system)? If escalated/hierarchy of approval required (in both manual
and system) then please provide the hierarchy2.
d) Is PO status updated to “billed”?
e) How are duties in IR/AP processing segregated? 4,5
INFS 7004 – Accounting Information Systems
The Expenditure Cycle – Interview Protocol The Australian National University | 4
© ANU COPYRIGHT. NO MATERIAL AVAILABLE FROM THE UNIVERSITY SITE MAY BE COPIED, REPRODUCED OR COMMUNICATED
WITHOUT THE PRIOR PERMISSION OF THE UNIVERSITY.
4. Payment/Cash Disbursement
a. Can treasurer/cashier perform payment if there is no AP? Does the system allow
record of cash disbursement when AP is not available?
b. Is there any time frame (discount/promised payment period) between IR to payment
(e.g. 2/10 Net 30)? Is there any system alert to notify the Treasury department of
outstanding overdue payment (e.g. AP has not been paid within the promised
payment period)?
c. Is there any approval required before cash disbursements? Is the approval online or
manual? If approval is online, any escalated/hierarchy of approval required
(embedded in the system)? If escalated/hierarchy of approval required (in both
manual and system) then please provide the hierarchy2.
d. Is payment executed via online or manual bank transfer? If via online, is the
application connected/interfaced to a banking system or is it via internet banking? If
via a banking system, is there any online approval? Please provide the hierarchy2.
e. How are duties in cash disbursement segregated? 4,5
Third Level Questions
1. What would the company do or expect to do to make the purchasing to payment
processes more efficient?
2. Are there external factors (e.g., recent changes in government policy, changes in
technology and other critical factors affecting the industry or market segment in which it
operates, hint: Porter’s Five Forces) that may impact the company?
3. Does the company plan to change their strategy in the near future (which could include
changing their target market and processes)?
NOTE:
1Authorisation to create supplier master should be segregated from those completing the accounts payable (AP) and
cash disbursements processes. For example, supplier master might be maintained by a separate function within the
purchasing department.
2Hierarchy should show the limit and authorised position for each level or if dual signatories required. For example:
< 100,000 AUD Head/Manager
| 100,000 – 1,000,000 AUD | Business Head and CEO |
| > 1,000,000 AUD | CEO and CFO |
3Warehouse is typically divided into three functions, Shipping (to customers), Receiving (from suppliers) and Storing
(physical custody of assets). In larger organisation, it is possible to have these functions as three separate sections
consisting of officers and supervisors. In smaller organisations with limited number of employees, these functions
should be done by different officers who report directly to the Warehouse Head/Manager.
4The accounts payable (AP) process assumes that there has been an authorised purchase order (PO) and a valid goods
receipt (GR). This presumes the segregation among purchasing, receiving, and accounts payable functions. A
treasurer/cashier function separate from the controller/accounts payable function must execute payments.
5The Accounting and Finance Department of larger organisations could have separate sections for Accounts Receivable
(AR), Accounts Payable (AP) and Treasury (cash receipt and disbursement) consisting of clerks and supervisors. In
smaller organisations with limited number of employees, AR Clerk, AP Clerk and Treasury Clerk (Cashier or Cash
Receipt/Disbursement clerk) will report directly to Accounting Head/Manager. For example, AP entry should be
performed by AP Clerk and AP approval should be performed by AP Supervisor or Accounting Head/Manager.
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