The article I found is called Expenditure Cycle: Traditional vs Digital
Accounting Information Systems Era which is a journal publication
from 2022. The link to the article is
https://pnrjournal.com/index.php/home/article/download/5299/63
24.
The article breaks down the expenditure into three key company
activities. The first key activity is the ordering of materials, goods, and
services. This ensures proper inventory for production. To properly
order the supplies and services, inventory management is vital.
Controls must be in place to ensure accurate inventories and an AIS
must be able to deal with the potentially large fluctuations in
inventories. Additionally, AIS systems can be in place that allow a
company to directly link with another company's system to either
automate or speed up the ordering process.
The next aspect is the receipt and storage of the ordered goods. Like
the first aspect, proper inventory management is key and accurate
inventories must be ensured. The process of ordering is separated
from receiving the goods because segregating the activities increases
controls and the AIS systems can be different. Receipt of the goods
should be reported to the department that needs them, such as
manufacturing, billing or purchasing, and the inventory system.
Finally, the third aspect is the approval of invoices. Once the terms
are met with the suppliers, the invoices are approved. Again, this
function is separated from the remainder of the process. The
payments are recorded in an AIS with documents attached. Once the
payments are recorded, a journal entry is made to adjust the
company's financials for the invoices. "Expense information also
flows from the expense period to the general ledger and reporting
functions for inclusion in financial reports and various management
reports" (Eka, Muda, & Yunira, 2022). Overall, AIS plays a vital role in
all aspects of the expenditure cycle and due to the close relationship
with suppliers, a company should also pay attention to the supplier's
systems.
Dennis
Reference:
