The accounts payable process flow most familiar to readers is the one shown in Exhibit 1. This process flow takes advantage of the basic features of a computerized accounting system, including the minimum set of controls needed to ensure that it operates properly. The small black diamonds on the flowchart indicate the location of key control points in the process, with de­scriptions next to the diamonds.

The process flow in Exhibit 1 includes many steps already seen in the paper-based payables process flow. By consolidating some accounting in­formation into a central accounting database, the accounting staff now has access to more online information for the three-way matching task, but most computer-enabled users still conduct a manual matching, rather than at­tempting to automate the process. There is also no need to review the system

Exhibit 1 System of Controls for Computerized Accounts Payable

for duplicate supplier invoices manually, since this can be done by the ac­counting database. Further, the system will inform users when payables are due for payment, so no manual tracking of due dates is necessary. In addi­tion, since checks are usually printed on a laser printer, there is only a sin­gle page printed, one portion of which is used as the in-house check copy. Thus, a separate page is no longer used as the check copy. Finally, there is no need to construct or print a check register or cash disbursements journal, since these documents are created automatically by the accounting software. Thus, computerization of the accounts payable process results in a number of efficiencies, though the overall process bears numerous similarities to the original paper-based system.

The controls noted in the flowchart are described in the bullet points that follow, in sequence from the top of the flowchart to the bottom.

• Automatic duplicate invoice number search. The accounting software automatically checks to see if a supplier’s invoice number has already been entered and warns the user if this is the case, thereby avoiding the need for manual investigation of potentially duplicate invoices.
• Conduct three-way match. The payables staff must compare the pricing and quantities listed on the supplier invoice to the quantities actually received, as per receiving documents, and the price originally agreed to, as noted in the company’s purchase order.
• Print report showing payables by due date. Since the computer system stores the invoice date and number of days allowed until payment, it can report to the user the exact date on which payment must be made for each invoice, thereby eliminating the need to manually monitor this information.
• Check stock from locked storage. Unused check stock should always be kept in a locked storage cabinet. In addition, the range of check num­bers used should be stored in a separate location, and cross-checked against the check numbers on the stored checks, to verify that no checks have been removed from the locked location.
• Check signer compares voucher package to check. The check signer must compare the backup information attached to each check to the check itself, verifying the payee name, amount to be paid, and the due date. This review is intended to spot unauthorized purchases, payments to the wrong parties, or payments being made either too early or too late. This is a major control point for companies not using purchase or­ders, since the check signer represents the only supervisory-level review of purchases.

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