Get documents about "Accounts Payable
Document Sample
City of ______________
Summary and Evaluation of Key Controls
Accounts Payable Disbursements Cycle
The following summarizes the key controls that typically would be relevant to a local government client.
Determine if we have addressed these controls in the activity-level controls matrix attached.
1. Persons processing accounts payable are separate from those ordering or receiving goods or
services.
2. There is an appropriate system for review and approval of vendors.
3. Invoices are properly approved for payment.
4. The accounts payable GL account and list of accounts payable are reconciled regularly.
5. In some governments (espcially larger organizations), there is a formal purchase-order process in
place.
6. There is a process to review, record, and approve retainages and encumbrances at year end.
If there are controls listed above that are not in place, evaluate if there are compensating
controls that achieve the same control objective and list here:
Summary 1
City of Brookfield
Internal Controls Documentation
Accounts Payable Disbursements Process
Process Documentation Control Procedure
(A) (B) (C)
Vendor Invoice Processing:
Invoices for goods and services are received Each department has been issued a stamp
and approved by the department that ordered for approving invoices. This stamp includes
them. Each department receives and signs lines for the date, PO number, signature of
for the goods that they ordered. They are the person approving, and G/L account
responsible for checking the quantities and number(s) to be charged.
quality of the goods that are received. They
are also responsible for checking invoice
pricing and the total amount due.
Only authorized personnel within each Department Approval Authorization Lists are
department may approve items for payment. kept on file in the Accounting Department.
These lists are updated on an annual basis.
Checks requests are used to process non- Check request forms are provided to the
invoiced items for payment such as refunds various departments by the Accounting Dept..
of deposits, employee reimbursements (other Only original (blue print) forms are accepted,
than travel), refunds of overpayments, etc.. no copies. All check requests must be
approved by the Accounting Manager.
Contractor payment requests for public works The Accounting Manager must approve all
projects are submitted on special forms contractor payment requests. The Utility
generated by the Engineering Department. Accountant approves contractor payments
for water/sewer projects.
Invoices for capital projects require project All capital project invoices must be approved
and sub-projects numbers in addition to the by either the Accounting Manager or the
appropriate G/L account numbers. Utility Accountant.
Procurement Card Transactions:
Procurement cards are issued to select City The City's Procurement Card Program is
employees to purchase goods and services in administered by the Accounting Manager who
Initiation of transaction
instances where the issuance of a purchase has been designated as the City's Program
order is not required and where the supplier Administrator.
accepts credit card payments.
Each cardholder is assigned daily and monthly Changes to cardholder profiles can only be
transaction limits. In addition, each cardholder made by the Program Administrator.
is assigned to a Merchant Category Group JP Morgan Chase requires a security
which restricts use by certain vendor types identification code whenever requesting
(MCC codes). charges to cardholder profiles.
Cardholders review and approve their monthly Cardholders print an Expense Report listing
charges using an online system provided by all their charges for the current billing cycle.
JP Morgan Chase, the card issuer. As a part They sign and date their report and forward it
of this process the cardholder must enter an to the Accounting Manager. The Accounting
expense description and the G/L account Manager reviews all cardholder transactions
number to be charged for each transaction. and compares them to the monthly statement
from JP Morgan Chase.
e83a627e-3211-4475-b79e-8c7363f1b1fc.xls - AP Disbursements Matrix 2
Process Documentation Control Procedure
(A) (B) (C)
ACH Transactions:
Certain payments such as debt service, All ACH transactions are initiated by
payroll taxes, pension contributions, and authorized Finance/Accounting personnel.
health insurance claims are paid via an ACH
automatic debit to the City's bank account.
Prior to withdrawal, ACH documentation is ACH transactions are approved and coded
placed in a special file with the Accounts (G/L account numbers) by the person who
Payable Clerk. These transactions are posted initiated the transaction.
on a weekly basis in the same manner as
vendor invoices.
Vendor Payments By Check:
Approved vendor invoices are forwarded to The Accounts Payable Clerk runs a tape of
the Accounting Department on a daily basis. the amounts of each invoice in the batch and
Invoices are entered by batches into the enters the total into the accounts payable
accounts payable system by the Accounts system. The system tracks the amounts of
Payable Clerk. each invoice being entered and compares the
total amount entered to the batch total.
Once all of the invoices have been entered a The Accounts Payable Clerk compares the
Vendor Invoice Edit Listing is run. Running total amount on the Vendor Invoice Edit
this report also generates an Error Listing Listing to the batch total and checks the
report. If errors exist, the batch will not post. Error Listing report.
If correct, the batch is posted which updates
vendor files and creates the general ledger The Vendor Invoice Edit Listing and Journal
journal entry. The journal entry is then posted Post Listing (Summary & Detail) are retained
to the general ledger. for audit purposes.
A/P checks are run on a weekly basis. Accounts payable checks are prenumbered
Invoices are selected for payment based upon and kept in a locked storage room in the
the due date. A Selected Invoices Edit Listing Accounting Department.
is run and saved to compare with the check
register which is generated when the checks Check signatures are stored in a secure
are run. Next, the checks are generated, computer file that can only be accessed by
totals are verified, and the checks are printed. authorized IT personnel.
Note: Checks are automatically signed as
they are printed.
Once checks are run and the totals verified, The Selected Invoices Edit Listing, Check
the Accounts Payable Clerk runs the Post Register, and Journal Post Listing (Summary
Vendor Payments option that updates the & Detail) are retained for audit purposes.
vendor files and creates the general ledger
journal entry. The journal entry is then posted
to the general ledger.
Finally, the Accounts Payable Clerk uploads The Accounting Manager reviews the check
the check file to Tri City Bank for positive pay register and approves the uploaded check
and gives the Accounting Manager a copy of file on the Tridata system. The Accounting
Transaction recording the check register to review. Manager writes the Tridata confirmation
and processing number on the check register and initials it.
Procurement Card Payments:
Procurement card charges are paid via ACH The Accounting Manager receives, codes,
automatic debit to the City's bank account on and approves the monthly statement from
the 18th of each month. This payment is JP Morgan Chase.
processed along with other ACH payments.
e83a627e-3211-4475-b79e-8c7363f1b1fc.xls - AP Disbursements Matrix 3
and processing
Process Documentation Control Procedure
(A) (B) (C)
Monthly procurement card transactions are The Accounting Manager downloads the JP
uploaded into the accounts payable system Morgan Chase transaction information into an
from a file created through JP Morgan Chase Excel file. A copy of this worksheet is filed
Smart Data On-Line. with the JP Morgan Chase payment detail.
The Accounts Payable Clerk uploads the The Accounts Payable Clerk compares the
Excel file into the accounts payable system batch total to the JP Morgan Chase monthly
which creates an invoice batch. Each P-Card statement.
transcation is recorded as invoice in the
batch.
The Accounts Payable Clerk edits invoice The Accounts Payable Clerk checks the
information including adding vendor numbers Error Listing report and makes corrections
when necessary and entering purchase order as needed.
numbers if applicable. Edit reports are run
in the same manner as those for standard
vendor invoice processing.
If correct, the batch is posted which updates The Vendor Invoice Edit Listing and Journal
vendor files and creates the general ledger Post Listing (Summary & Detail) are retained
journal entry. The journal entry is then posted for audit purposes.
to the general ledger.
ACH Payments:
The Accounts Payable Clerk processes ACH ACH transactions are processed using a
transactions on a weekly basis. The process special bank code and documentation is
is similar to the recording of vendor invoices filed separately from A/P invoices paid by
that are paid via check. check.
Corrections to posted ACH and procurement Adjusting journal entries can only be made
card transactions can only be made through by the City's Accounting Manager, Utility
an adjusting journal entry. The Accounts Accountant, or Accountant.
Payable Clerk gives documentation to the
general accountant who makes the adjusting
journal entry.
Corrections to posted vendor invoices paid by Adjusting journal entries can only be made
How the incorrect
processing of
check can be made by voiding either the by the City's Accounting Manager, Utility
transactions is resolved check or invoice through the accounts Accountant, or Accountant.
payable system, or through an adjusting
journal entry.
Voids processed through the accounts Voiding of vendor checks or invoices through
payable system automatically generate the the accounts payable system must be
appropriate journal entry. approved by the Accounting Manager or other
designated Accounting Dept. personnel.
Reconciliation of the various Vouchers The Accounts Payable Clerk runs the Open
Payable general ledger accounts is done on Invoice Aging Report and provides the
a quarterly basis. An Open Invoice Aging information to the Accounting Manager.
Report is run as of a specific date. The report
Process for reconciling lists all of Vouchers Payable accounts and
detail to the general the balances as of the date selected. These
ledger balances are compared to the general ledger.
In addition, periodic reconcilations of the A Selected Invoice Edit Listing is run and the
outstanding (unpaid) vendor invoices are total is compared to a tape total of the actual
made. unpaid invoices.
e83a627e-3211-4475-b79e-8c7363f1b1fc.xls - AP Disbursements Matrix 4
