Question
Segregation of duties and documentation Lisa Curtis is documenting the purchasing and cash payments processes at Hardies Wholesaling, Inc. (HWI), a company in Iowa. HWI
Segregation of duties and documentationLisa Curtis is documenting the purchasing and cash payments processes at Hardies Wholesaling, Inc. (HWI), a company in Iowa. HWI distributes garden and landscaping items such as pots, furniture, fountains, mirrors, and sculptures.All items are made from materials such as stone, concrete, metal, and wood, and are distributed to retailers throughout the country.
Purchases are denominated in U.S. dollars. The purchasing department initiates a purchase order when inventory levels reach reorder points or sales staff notify the department of large customer orders that need to be specially filled. The purchase order is approved and sent to suppliers selected from an approved supplier list. Goods are transported from Southeast Asia by ship and are delivered by truck to the HWI central warehouse in Des Moines. A receiving report is generated by the receiving department and forwarded to the accounts payable department to be matched with the copy of the original purchase order and the supplier's invoice. When the package of documents is completed, a purchase is entered into the purchases journal that debits an appropriate account and credits accounts payable. When the cash payment is due, the cash payments department reviews the supporting documentation and requests payment of the invoice according to the supplier's payment terms. The payment is approved and the cash payment is made.
Required
- Create a flowchart or logic diagram to represent the flow of transactions from initiating a purchase order to cash payment.
- Which duties in the above process should be segregated?
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