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  • Cash Disbursements Procedures

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    Sheila Mae Araman
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    1. The document compares an automated cash disbursement system to a reengineered system. 2. The automated system improved inventory control and cash management but had issues like time lags, purchasing bottlenecks, and excessive paper use. 3. The reengineered system addressed these issues by using real-time processing, distributing terminals to users, and digital communication to reduce paper and lag times.

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    1. The document compares an automated cash disbursement system to a reengineered system. 2. The automated system improved inventory control and cash management but had issues like time lags, purchasing bottlenecks, and excessive paper use. 3. The reengineered system addressed these issues by using real-time processing, distributing terminals to users, and digital communication to reduce paper and lag times.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
    170 views13 pages

    Cash Disbursements Procedures

    Uploaded by

    Sheila Mae Araman
    1. The document compares an automated cash disbursement system to a reengineered system. 2. The automated system improved inventory control and cash management but had issues like time lags, purchasing bottlenecks, and excessive paper use. 3. The reengineered system addressed these issues by using real-time processing, distributing terminals to users, and digital communication to reduce paper and lag times.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 13

    CASH

    DISBURSEMENT
    PROCEDURES

    By: Sheila Mae M. Araman


    Differences between an Automated
    and a Reengineered System

    AUTOMATED SYSTEM: REENGINEERED


    I. Improved Inventory SYSTEM:
    Control I. Segregation of
    II. Better Cash Duties
    Management II. Accounting Records
    III. Time Lag and Access Controls
    IV. Purchasing
    Bottleneck
    V. Excessive Paper
    Documents
    Improved Inventory Control
     Inventory requirements are detected as they arise
    and are processed automatically.
     As a result, the risks of accumulating excessive
    inventory or of running out of stock are reduced
     With this advantage, however, comes a control
    concern.
     Program errors or flawed inventory models can
    cause firms to find themselves suddenly inundated
    with inventories or desperately short of stock.
    Better Cash Management

     The automated system promotes effective cash management


    by scanning the voucher file daily for items due, thus
    avoiding early payments and missed due dates.
     By writing checks automatically, the firm reduces labor cost,
    saves processing time, and promotes accuracy
     To control against unauthorized payments
     voucher file should be validated by comparing the vendor
    number on the voucher against the valid vendor file.
     a manager in the cash disbursements department physically
    signs the checks, thus providing control over the disbursement
    of cash
    Time Lag

     A lag exists between the arrival of


    goods in the receiving department and
    recording inventory receipts in the
    inventory file
     When sales clerks do not know the
    current status of inventory, sales may be
    lost
    Purchasing Bottleneck

     In this automated system, the purchasing


    department is directly involved in all purchase
    decisions.
     A vast number of routine purchases could be
    automated, thus freeing purchasing agents
    from routine work such as preparing POs and
    mailing them to the vendors
    Excessive Paper Documents

     All operations departments create documents,


    which are sent to data processing, and which
    data processing must then convert to magnetic
    media.
     Paper documents add costs because they must
    be purchased, stored, prepared, handled by
    internal mail carriers, and converted by data
    processing personnel
    Reengineered System

    1. It uses real-time procedures and direct access


    files to shorten the lag time in record
    keeping.
    2. It eliminates routine clerical procedures by
    distributing terminals to user areas.
    3. It achieves a significant reduction in paper
    documents by using digital communications
    between departments and by digitally storing
    records.
    Segregation of Duties

     This system removes the physical separation


    between authorization and transaction processing.
     Computer programs authorize and process POs as
    well as authorize and issue checks to vendors.
     The system provides management with detailed
    transaction listings and summary reports
    Accounting Records and Access Controls

     Advanced systems maintain accounting records on


    digital storage media, with little or no hard-copy
    backup.
     Sarbanes-Oxley legislation requires organization
    management to implement adequate control security
    measures to protect accounting records from
    unauthorized access and destruction

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