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PURCHASE AND PAYMENT CYCLE - Coggle Diagram
PURCHASE AND PAYMENT CYCLE
1.Purchase cycle
Functions:
The ordering of goods, the receiving of goods and Recording of Good.
Documentation
Requisitions, list of approved suppliers,POs,
DN, GRN, supplier invoice, purchase journal, credit notes etc
Control objectives:
Occurrance/Validity
:all recorded purchases are valid & supported by proper documentation.
Authorisation
: all purchases are authorised according to company policy
Recording
: all purchase transactions are correctly recorded
Cut off
: purchase transactions recorded in the correct reporting period.
Internal control
: e.g re-order level system or purchasing policy must be in place.
2. Payment cycle
Functions: Payments to creditors/payables
Documentation:
remmitance advices, cheque, bank statement
cash payment journal etc
Control objectives
Completeness
: All valid payment transactions are recorded and nothing is left out.
Accuracy
: Payments are made at the correct amount and is arithmetically correct.
Classification
: All payments classified to the correct creditor's account
Internal controls: All calculations are reviewed by an independent person. All payments made to creditors done by means of a cheque requisition which is
authorised by a senior official.