Good Morning, this is the 4th Group to report about the Third Business Process, chapter 12- The

Purchasing Process., and the Disbursement Cycle, Chapter 13 –xxxx

So Basically, our group is tasked to report about the Expenditure Cycle. The objective of the
expenditure cycle is to convert the organization’s cash into the physical materials and the human
resources it needs to conduct business . In this we concentrate on systems and procedures for acquiring
raw materials(for a manufacturing company) and finished goods (for a merchandising company)from
suppliers

Most business entities operate on a credit basis and do not pay for resources until after acquiring them.
The time lag between these events splits the procurement process into two phases: (1) the physical
phase, involving the acquisition of the resource, (flashes slide)and (2) the financial phase, involving the
disbursement of cash. As a practical matter, these are treated as independent transactions that are
processed through separate subsystems.

(yung comparison sa other group)

So this are the Objective of the Report(flashes objectives).

Chapter 11- the Purchasing Process, the Purchasing Process basically covers the First three steps in the
Purchase to Pay Process and in the Materials Management module.
1. Requirements determination or Identification of what is Needed
2. Purchase order processing or Placing of orders
3. Goods Receipt

So Purchasing is inevitable for any business, because business is firstly a trading transaction.
and we need to know, the Best Purchasing Tactics, why? Because First Hand, Purchasing is a Cost Driven
Activity and commits a company to a liability, it involves outlays, and for every outlay we need to make
sure that there is a benefit for the said cost. Kasi, Lower Cost, Lower Purchasing with utmost Quality,
would lead to a benefit Directly to profit and indirectly through consumer trust to the Business..
So let us introduce this Purchasing as a process.

Purchasing Process- it is an interacting structure of people, equipment, methods and controls that is
designed to accomplish the following functions:

>Handle Repetitive work/routine(Structured Decisions that’s why tinatawag na “Process” – IDC pg 23)
a purchasing process is a constant happening transaction, repetitive, abi nga and anong sabi sa
chapter 2 for every repetitive transaction kailangan merong, Structured Decision. And this Structured
Decision gives the Natural classification of the Purchasing Acitivity as a Process because it is a Process of
Steps or Strructures

>Support the decision needs who manage the purchasing and receiving department
Purchasing: What to Buy, When to Buy(computes reorder point for storage cost minimization),
Who to Buy from(evaluates suppliers from past transations on who delivers fastest and evaluates
current information on who sells the cheapest for profit)

>Assist in the Preparation of Internal and External Reports (Internal:Managers/BOD

External:Taxes)(Audting)
The Open Purchase Orders Report (by Buyer) lists all or specific open purchase orders that relate to
buyers. ... An open purchase order is one that references an item that your supplier has not yet fully
billed
Here the Application of Controls here, this is a basic framework kung papano dapat ang Purchasing
Process it is still subject to the need of a company, pwedeng dagdagan pwedeng bawasan but preferably
the former

P1. Make Sure that there is Authorized Purchase Requisitions

-To make sure that the requested purchase is within Budget and is really needed, here the One who
issues a request and the One who approves obviously must be a different person. Usually the latter is
the Supervisor or some Some Sort.
Benefit: -Prevents Excessive Purchases
- Accountability

Tick Input Validity, with proper authorization we make sure that it is Valid

P2. Make sure that We are buying from a tested Supplier.

Benefits: Effectiveness Goal A: to apply an historical transactions to know which suppliers have complied
with the requirements of the contract both in quality and in delivery time as well as with the most
affordable

Effectivenss Goal C: Since it is Screened there is a lesser risk of fraud brought by conflict of
interest. Like for example, ahm if ever yung isang purchasing Head ay meroong Controlling ownership sa
isang supplier mapreprevent yung chance na dun lagi bibili kahit pa unfair yun sa Buying Company

Efficient Employment of Resources: Since there is already a prescribed list, time finding the
prospective seller

Input Validity: Since Authorized yung mga nasa list then we make sure they are valid

P3 Ensuring that the one who writes the approved vendors are monitored by a higher Official
-Video

P4. To pick the most Efficient provider

Effectiveness Goal A.

P5. Make sure that Purchase Orders are Authorized, Unbiased and Reviewed
Effectiveness Goal A: To make sure the appropriate details were present and to see whether if
the Purchase order matches with the requisition
Effectiveness Goal C: Make sure that the Purchase Officers are not at a disadvantage in
exchange for disadvantage of the Company
Input Validity: Authorized.

P6. For notification to the Requesting department and affirmation from that Department
Input Completeness: Send the details of the Purchase Order to know any lapses and variances.
P7 Efficiency through BARCODE READERs.
Efficiency: Saving of Resources
Security: Marks the resources to Prevent stolen goods from transferring in receiving dep to the
requesting dep
Valid: Make sure that it it is actually there and that it is not a ghost purchase
Accuracy: Machine beats human errors

P8 Prevents Accepting Goods that were not ordered

Valid: you compare if there is really an existing order for these good by checking It on the purchase
order master data

P9: to make sure that what is ordered is what is actually received