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Procurement and Human Resource Business Processes

Chapter 8

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood

8–1

Learning Objective 1

Describe the procurement business process.

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood

8–2

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

8–3

The Procurement Business Process
Requirement determination Selection of source Request for quotation Issue purchase order Receipt of the goods Invoice verification

Selection of a vendor

Vendor payment
8–4

 2004 Prentice Hall Business Publishing, Accounting Information Systems, 9/e, by Bodnar/Hopwood

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

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

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. by Bodnar/Hopwood 8–8 .The Procurement Business Process All procurement documents are assigned a document type code. 9/e. Accounting Information Systems.

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

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

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

Accounting Information Systems. by Bodnar/Hopwood . 9/e.Stores (Requisitioning) Prepare requisition Requisition processing Verify goods Goods receipt processing Purchase database Receiving report Delivery Receiving Accounts payable 8 – 12 Purchase requisition Purchasing Receiving report  2004 Prentice Hall Business Publishing.

9/e.Purchasing Competitive bidding Vendor Purchase requisition Select vendor Order processing Invoice Purchase database Prepare order Invoice verification Purchase order Vendor Accounts payable invoice  2004 Prentice Hall Business Publishing. Accounting Information Systems. by Bodnar/Hopwood 8 – 13 .

by Bodnar/Hopwood . 9/e. Accounting Information Systems.Receiving Vendor Purchase database Delivery Match to purchase order Enter receipt Order processing Blind count Delivery Stores Stores Receiving report 8 – 14  2004 Prentice Hall Business Publishing.

Accounts Payable Purchase requisition Purchase order Receiving report Invoice Retrieve documents Purchase database Prepare voucher Voucher processing Voucher check On due date Accounts payable Voucher register Voucher Journal voucher Cash disbursements General ledger 8 – 15  2004 Prentice Hall Business Publishing. Accounting Information Systems. by Bodnar/Hopwood . 9/e.

by Bodnar/Hopwood .Cash Disbursements Voucher check Accounts payable Sign checks Voucher check Post Voucher Voucher Cancel voucher after signing check Check register Forward direct to payee Voucher check Control total General ledger 8 – 16  2004 Prentice Hall Business Publishing. Accounting Information Systems. 9/e.

by Bodnar/Hopwood . 9/e.General Ledger Control total Cash disbursements Journal voucher Compare post Accounts payable Control total Journal voucher General ledger processing General ledger 8 – 17  2004 Prentice Hall Business Publishing. Accounting Information Systems.

Internal Audit Cancelled checks Bank Independent of cash disbursements Bank reconciliation Bank statement Bank reconciliation Check register  2004 Prentice Hall Business Publishing. 9/e. Accounting Information Systems. by Bodnar/Hopwood 8 – 18 .

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

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

 2004 Prentice Hall Business Publishing.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. 9/e. Accounting Information Systems. by Bodnar/Hopwood 8 – 21 .

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

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

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

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

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

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

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

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. by Bodnar/Hopwood 8 – 30 . Accounting Information Systems. 9/e.

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

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

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

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

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

Accounting Information Systems. 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.Human Resource Management Business Process The HR system should provide tools for the setup and maintenance of information pertaining to the organizational structure. by Bodnar/Hopwood 8 – 36 . 9/e.

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

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

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

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

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

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

Accounting Information Systems.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. by Bodnar/Hopwood 8 – 43 . 9/e.  2004 Prentice Hall Business Publishing.

and deductions Paychecks  2004 Prentice Hall Business Publishing. raises. Accounting Information Systems. 9/e. by Bodnar/Hopwood 8 – 44 .Transaction Cycle Controls in Payroll Processing Timekeeping Job time summary Reconcile Employee time cards Employee time cards Payroll register Payroll Authorization. terminations. notification Personnel Authorization. notification Employee hiring.

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

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

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

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