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I have to make two flow charts 1. for purchases 2. for cash disbursements

In addition to preparing the flowchart, students must identify weaknesses within the processes, and communicate those weaknesses in a MEMO to management.

5. GENERATORS R US (CENTRALIZED SYSTEM WITH DISTRIBUTED TERMINALS) Generators R Us (GRU) is a leading manufacturer of partible electric generators used for emergency The Expenditure Cycle Pal CHAPTER 5 S S I power supply in both civil and private disaster situa- tions. GRU's primary customers are disaster recov- ery companies that assist home owners following flooding and other natural disasters. GRU also sells to building contractors, municipalities, and rental companies. The company purchases its raw materials including bearings, copper wire, and insu- lating materials inventory directly from the manufac- tures. GRU's headquarters and manufacturing facilities are in Dallas, Texas, where they employ 125 manufacturing and clerical staff. GRU uses a centralized computer system with distributed terminals in its various departments. Recently they have experienced operational pro- blems with their system and GRU management has hired your auditing firm to assess its operations and internal control procedures. Purchasing System When an inventory item falls to the reorder point, a purchase requisition is automatically created and printed on the terminal in the purchasing depart- ment. The clerk in the department selects suppliers and prepares a purchase order. A copy of the PO is sent to the vendor, and a copy is sent to the receiving department. Then, the clerk adds a record to the open/closed purchase order file through an update program in the data processing department. When the receiving clerk receives the inventories, he reconciles the goods with the packing slip and the purchase order. After the reconciliation, the receiv- ing clerk prepares a hard-copy receiving report recording the quantity and quality of the goods received. A copy of the receiving report accompanies the goods to the warehouse, and a copy is filed in the receiving department. Using the department termi- nal, the receiving clerk adds a record to the digital receiving report file. The system then automatically closes the purchase order. Upon receiving the inven- tories, the warehouse clerk updates the inventory subsidiary ledger through the terminal in the warehouse. When the supplier's invoice arrives, the AP clerk adds a record to the supplier invoice file, which trig- gers the system to automatically set up a liability in the AP subsidiary ledger based on the financial infor- mation contained in the invoice. The system then automatically updates all affected GL accounts. Cash Disbursements System Each day, the system scans the AP ledger for items due to be paid and prints the checks. The check is 247 e Part I: Purchases and Cash Disbursements Procedures sent to the vendor, and a copy is sent to cash disbur- sements, where it is filed. Next, the system adds a record to the check register file and removes the lia- bility in the AP subsidiary ledger. Finally, the system automatically updates the GL accounts