Accounts Payable - Local Process Flow

Flowchart

Narrative Description

Key Controls

Effective?

IT
Generate
d?

Significant Risk Points

Recommendation

Fraud may arise from

the management by
producing fictitious
statements

We recommend that
the Billing
Statements or
Invoices should
directly send to the
Office.

Start

Billing Statements or Invoices will be reeived

in warehouse and will be sent to Makati City,
MHECO's Office, which will be reeived by
Ms. Veronica Co, VP for Admin and Finance.

Billing
Statement or
Invoices

The VP Finance will

review the billing
statements for
approval before
further process

Effective

No

Effective

No

New Process Flow Chart

New Narrative Report

Start

The Billing Statement or Invoices

should directly send to the office to
avoid producing fictitious statements.

Billing
Statement or
Invoices

Payment to Supplier
Yes

Payment
to
Supplier?

Purchase
Order

Yes

Match
Documents

Preparation
of check
voucher and
check

Check

Authorization
of checks

Remit to bank or
Release from the
local suppliers

End

No

Other
Expenses

No

Ms. Portia will match the billing statement

and purchase order and send the approved
documents to Ms. Jean Regalado,
Accounting Staff forAccounts Payable - Local.

Subject to
PCF
Budget?

Petty
Cash
Fund

Ms. Veronica Co will approve and send the

billing statement or invoices to Ms. Portia
Cardel, Accountng Head.

Other
Expenses

Ms. Jean will now prepare the check voucher

and the unsigned check that will be send to
Mr. Nilo G. Samia, President.

Mr. Nilo will approve and sign the check

which will return to Ms. Jean.
Ms. Jean will send the check to Ms. Ella,
Administrative Assistant, which will be picked
up by local suppliers or will be remitted to
the bank through the messengers depending
on the terms with supporting O.R. She will
record the O/R given by the suppliers.
(Pick-up and follow up: The Local Suppliers
should follow up at 11:00 in the morning
and pick - up starting from 1:00pm until
5:00pm.)
Payment to Other Expenses
Billing statements or invoice for other
expenses received including for
reimbursement will be reviewed.
Expense such as gasoline, transportation,and
budget meal are taken from the Petty Cash
Fund (PCF) which prepared by
Ms. Eufemia Latap, Accounts Payable-Foreign.
Other expenses,including utilitilies, are paid
by issuance of check.

Payments will be recorded. Counter check

the invoices to deposit slips. It will
automatically recorded in the database.

Matching of
documents by the
accounting head to
verify receipt of goods
purchase order and
invoice information.

There is one person

who prepare the
checks and a different
person who signed it.
By doing so, there is a
cross - check on the
issuance of cash.

Ineffective

Yes

Duplication of
Payments

No
Ineffective
No
Effective

Ineffective

Effective

Ineffective

Effective

No

An accountant who
prepares check
voucher may
manipulate or
commit fraud if she
will be preparing
checks.

An accountant may
committed a
transposition error.

No

No

Yes

There's no
segregation of duties
in Monitoring,
Authorizing,
Recording, and
Custodian

We recommend that
preparation of check
voucher and
issuance of check
should segregated
by different person.

We recommend that
there's a limit in the
accessibility of the
master file of Accounts
Payable only to the V.P
for Admin and Finance.
Also, he should
reviewed the summary
of unclaimed checks.

We recommend to
set a minimum
amount below P500
expenses for
subjecting in Petty
Cash Fund (PCF).
We recommend that
the management
should have Petty
Cash Custodian.

No

Payment
to
Supplier?

Payment to Supplier

Update
Vendor's
Master File

Yes

Match
Documents

Preparat
ion of
check
voucher
and
check

Petty
Cash
Fund

Other
Expenses

Check
Voucher
Check

Remit to bank
or Release
from the local
suppliers?

Voucher
or O/R

I.D

No

Expenses
below
P500?

Authorization
of checks

Yes

Accounting Head will update the

Vendor's Master File to remove
inactivate old vendors anymore as
well as identify and remove
duplicate vendors.

Other
Expenses

Purchase
Order

No

An official list of
suppliers who will pick
up the payment . For
the unclaimed checks,
they have masterfile
for security.

Yes

We recommend that
the accountant
should clean Vendor
Master File and pre numbered the billing
statements with the
purchase order

Accounting Head wil match and put

pre -numbered billing statements with
the purchase order.

Accounting Staff for Accounts PayableLocalwill prepare the check voucher

and. Another staff will prepare and
issue the check.
The President will review and approve
the check which will return to the
assigned Accounting Staff for
Accounts Payable - Local.

No

Update the
database for the
unclaimed checks.

The Administrative Assistant will be

the one release the checks to the local
suppliers with supporting O.R and
Identification Card. To make sure that
the transaction was done,he/she will
encode the O/R.
The Accounting Staff for Accounts
Payable Local will update the Accounts
Payable Master File.
Petty Cash Fund

Encode the
Voucher or
Update the
Master File

End

Petty Cash Custodian will be the one

review for the receipt to ensure the
reason for the expense is noted on it.
And also, he/she will be the one
liquidate.