CASE A: PureProducts Company (Accounts payable and cash disbursements processes)

The PureProducts Company sells medical supplies to hospitals, clinics, and doctors' offices. PureProducts uses an ERP system for all of its business processes. PureProducts employs the following procedures for accounts payable and cash disbursements. The accounts payable (AP) department receives invoices from vendors. An AP clerk enters the PO number from the invoice into the computer, and the computer displays the PO. The clerk then keys the invoice data. The computer matches the invoice data with data on the PO (purchase and receipt data). If there are price or quantity variances of more than 5 percent, the invoice is routed, via workflow, to a purchasing agent for approval. Once validated (by the computer and, if necessary, purchasing), the computer records the invoice (i.e., accounts payable) and updates the PO and general ledger master data. Every morning, the accounts payable department reviews open invoices (i.e., accounts payable) to determine if they should be paid. An AP clerk selects those i1woices that are to be paid, and the computer prints a check in the accounts payable department and updates the accounts payable and general ledger master data. Accounts payable mails the check to the vendor.

P 13-2. For the PureProducts Company, complete the following requirements:

a. Draw a systems flowchart.

b. Prepare a control matrix, including explanations of how each recommended existing control plan helps to accomplish or would accomplish in the case of missing plans, each related control goal. Your choice of recommended control plans could come from this chapter plus any controls from Chapters 9 through 12 that are germane to your company's process.

c. Annotate the flowchart prepared in part (a) to indicate the points where the control plans are being applied (codes P-1, , P-11) or the points where they could be applied but are not (codes M- 1, , M-11)