The ABC Company performs its expenditure cycle activities using its integrated ERP Receiving department employees have read-only access to outstanding purchas system as follows: orders. Usually, they check the system to verify the existence of a purchase order Employees in any department can enter purchase requests for items they note as prior to accepting the delivery, but sometimes during rush periods they unload trucks either out of stock or in small quantity. and place the items in a corner of the warehouse where they sit until there is time The company maintains a perpetual inventory system. to use the system to retrieve the relevant purchase order. In such cases, if no purchase order is found, the receiving employee contacts the supplier to arrange for Each day, employees in the purchasing department process all purchase requests the goods to be returned. from the prior day. To the extent possible, requests for items available from the same Receiving department employees compare the quantity delivered to the quantity supplier are combined into one larger purchase order to obtain volume discounts. indicated on the purchase order. Whenever a discrepancy is greater than 5%, the Purchasing agents use the Internet to compare prices in order to select suppliers. receiving employee sends an e-mail to the purchasing department manager. The If an Internet search discovers a potential new supplier, the purchasing agent enters receiving employee uses an online terminal to enter the quantity received before the relevant information in the system, thereby adding the supplier to the approved moving the material to the inventory stores department. supplier list. Purchase orders above MYR10,000 must be approved by the purchasing Inventory is stored in a locked room. During normal business hours, an inventory department manager. EDI is used to transmit purchase orders to most suppliers, but employee allows any employee wearing an identification badge to enter the paper purchase orders are printed and mailed to suppliers who are not EDI capable. storeroom and remove needed items. The inventory storeroom employee counts the quantity removed and enters that information in an online terminal located in the storeroom. Occasionally, special items are ordered that are not regularly kept as part of inventory from a speciality supplier who will not be used for any regular purchases. In these cases, an accounts payable clerk creates a one-time supplier record. All supplier invoices (both regular and one-time) are routed to accounts payable fo review and approval. The system is configured to perform an automatic three-way Occasionally, special items are ordered that are not regularly kept as part of inventory from a speciality supplier who will not be used for any regular purchases. discrepancies will recordeu casil valances. In these cases, an accounts payable clerk creates a one-time supplier record. All supplier invoices (both regular and one-time) are routed to accounts payable for Required: review and approval. The system is configured to perform an automatic three-way match of the supplier invoice with the corresponding purchase order and the Identify weaknesses in ABC's existing expenditure cycle procedures, explain the probler receiving report. and suggest a solution. Each Friday, approved supplier invoices that are due within the next week are routed to the treasurer's department for payment. The cashier and treasurer are the only employees authorized, to disburse funds, either by EFT or by printing a cheque. Cheques are printed on a dedicated printer located in the treasurer's department, using special stock paper that is stored in a locked cabinet accessible only to the treasurer and cashier. The paper cheques are sent to accounts payable to be mailed to suppliers. Monthly, the treasurer reconciles the bank statements and investigates any discrepancies with recorded cash balances