Take these three papers and combine them

There are certain problems with the expenditure cycle such as not having the appropriate system in place to determine when purchases are needed. Before placing orders, requisitions must be signed by the authorized personnel, if not, then the company will open itself up to kickbacks, embezzlement and fraud. Sometimes there is a problem with not keeping an approved vender list. When purchase order requisitions are not written, then they aren’t documented correctly. Purchasing more than five hundred dollars will need special authorization. The company have to make sure the products are needed because you don’t want to purchase unnecessary goods. (Wright, nd)

There is some advantages as well with the expenditure cycle. Once the company has established a good system, then it is easy to follow and keeps purchasing intact. Keeping inventory of your purchases and keeping the purchasing power in a few employees’ hands will eliminate a lot of unnecessary spending. This system will eliminate theft from employees as well as fraud. Putting this system in place of who our company orders from and the method of payment will make it hard for employees to embezzle monies. Writing your procedures down for purchasing in the policy and procedure manual in which it must be followed to the tee will make your company strong and strengthen the financial infrastructure.

Reference

Wr:ight, T (nd) What is an Expenditure Cycle?

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