The figure below depicts the basic activities performed in ACME Incorporated’s
ACME Expenditure Cycle Procedures
The table showing the company’s expenditure cycle procedures appears as follows:
Activity Performed (sequential, left-to-right across all rows)
Issue Bill of Materials for purchasing
Receive and Count Inventory
Receive Invoice from Supplier, Use P.O. and Receiving Report to Approve Invoice a
information received from purchasing and receiving clerk
Make EFT Payment to Supplier, Receive and Reconcile Bank Statement
The following additional information supplements the figure:
Because of cash flow problems, the company always pays suppliers on the
last possible day before incurring a penalty for late payment. Supplier
invoices are processed and paid weekly. Every Friday, the accounts payable
clerk reviews and approves all invoices with a due date the following week.
The purchasing manager reviews and approves all purchases prior to emailing them to suppliers.
After counting and inspecting incoming deliveries, the receiving clerk enters
the following information into the system:
o Quantities received for each inventory item
o Date and time received
o Supplier number
After entering that information, the receiving clerk takes the inventory to the
inventory control department for storage.
Access to the inventory control department is restricted.
Inventory is only released to production when a properly authorized request is
received. When the inventory is released, the inventory control clerk updates
the perpetual inventory system.
Physical counts of inventory are taken every three months. Discrepancies
between the counts and recorded quantities on hand are investigated. Upon
resolution of the investigation, the plant manager authorizes adjustments to
the perpetual inventory records to change them to the amount actually on
Identify at least three control weaknesses in ACME’s expenditure cycle. For each
weakness, explain the threat and suggest how to change the procedures to mitigate that
threat. Submit your assessment of the controls as a Word or pdf document here by the
due date. Use full sentences. Paragraphs and/or bullet points are acceptable. Put your
name and REDID at the top of the document you submit.
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