Romney / Steinbart

Problem 3.6

Ashton Fleming has decided to document and analyze the accounts

payable process at S&S so the transition to a computerized

system will be easier. He also hopes to improve any weaknesses

he discovers in the system. In the following narrative, Ashton

explains what happens at S&S:

Before S&S pays a vendor invoice, the invoice must be matched

against the purchase order used to request the goods and the

receiving report that the receiving department prepares. Because

all three of these documents enter the accounts payable

department at different times, a separate alphabetical file is

kept for each type of document. The purchase orders that are

forwarded from purchasing are stored in a purchase order file.

The receiving reports are stored in a receiving report file.

When vendor invoices are received, the accounts payable clerk

records the amount due in the accounts payable file and files

the invoices in the vendor invoice file.

S&S pays all accounts within 10 days to take advantage of early payment discounts. When it is time to pay a bill, the accounts

payable clerk retrieves the vendor invoice, attaches the

purchase order and the receiving report, and forwards the

matched documents to Ashton Fleming.

Ashton reviews the documents to ensure they are complete,

prepares a two-part check, forwards all the documents to Susan,

and records the check in the cash disbursements journal.

Susan reviews the documents to ensure that they are valid

payables and signs the checks. She forwards the check to the

vendor and returns the documents and the check copy to the

accounts payable clerk. The clerk files the documents

alphabetically in a paid invoice file. At the end of every

month, the accounts payable clerk uses the accounts payable

ledger to make an accounts payable report that is forwarded

to Susan. After she is finished with the report, Susan files it

chronologically.

Required:

A) Evaluate S&S Company's procedures to determine which areas

in the accounts payable function could be computerized.

B) revise flowchart to reflect your proposed

changes for a computerized system.