Accounting: What You Need to Know

Question one 

A voucher is a form that is often prenumbered and is mostly used in the department of accounts payable for standardization and enhancement of an organization's internal control overpayments made to its service providers and vendors. A company's voucher system in regards to accounts receivables is primarily used as a checkpoint for ensuring that as the purchase of goods or services moves through the system, each of the transactions made will have valid authorizations such as accompanying invoices payment or purchase requisition. A voucher system helps in improving the internal control of organizations in terms of petty cash payment procedures by ensuring that there are no payments that exceed the predetermined amount that can be made from petty cash funds. Additionally, by employing the voucher system, organizations can maintain internal stability by ensuring that the personnel who are authorized to compile, store, and organize vouchers are not the same individuals who make voucher payments. 

Question Two: 

The acquisition and payment cycle of an organization is known as the PPP cycle for payments, purchases, and payables composed of two classes of transactions; cash disbursements class and the acquisition class. Therefore, for organizations, the receipt of goods and services is the most critical point in the cycle because it is the instance in which a firm can recognize the acquisition and determine if the destination of the FOB is related to the liability on their records. Additionally, since the acquisition and payment cycle impacts the accuracy of objectives in addition to the completeness and classification of objective, the receipts of goods and services is significant as it helps in creating receiving reports that can be stored and later compared to purchase orders and vendor’s invoice. 

Question three: 

As opposed to incidences where evidence is discovered suggesting that a different approach should be employed, auditors often will choose to follow a more conservative approach in selecting customers for accounts receivable confirmations and account payable confirmations for vendors. Therefore, most times, auditors will assume that clients are more likely to understand accounts payables, thereby concentrating on the vendors with whom the clients actively deal with especially if the balances of the vendors appear to be lower than average on the payable listing of a client at the time of confirmation. Moreover, in verifying the accounts receivables, an auditor will always have the assumption that the client is more inclined to overstate the accounts payables. For this reason, auditors often concentrate more on more significant cash balances and thus are not more concerned with zero balances. 

Question Five 

A procurement card is a tool that is used to help organizations manage large volumes of small transactions that would, in many cases, prove to be cumbersome to the process of the accounts payable (Diley, 2011) . There are five preventive controls and six detect ive controls about the P-card. P-card preventing controls involve the following; background checks which allow organizations to check the backgrounds of all cardholders, and dollar limits, which controls the monetary limits available to a cardholder in both their monthly and daily use. Detective controls such as reconciliation reviews, on the other hand, allow an organization to review transactions, explanations, and receipts on time, while monthly reports allow p-card administrators to generate accurate monthly reports and consequently forward them to the appropriate manager (Diley, 2011) . More importantly, since the reports include potential split transactions and cash payments by clients in addition to spending trends, they thus enable a company to gain additional oversights on appropriate use. 

Reference  

Diley, J. E. (2011, December). Preventing, Detecting, and Investigating Procurement Card Abuse. Retrieved from ACFE: https://www.acfe.com/article.aspx?id=4294970387