Question

WaveHuggers Foundation

Extra Credit Assignment: Acquisition and Expenditure Process & Cash Disbursement Processes

Acquisition and Expenditure and Cash Disbursement Cycles:

The chapter’s expenditures typically involve reimbursement for expenses initially covered by the volunteer and general operating expenses such as rent, utility bills and supplies for our beach clean-up and water sampling programs. Most invoices are eventually paid by check or debit card. No online payments are permitted and not automatic payment drafts can be established with our vendors per organizational policy.

Volunteer reimbursements:

After volunteers pay for chapter expenses with their personal funds, the volunteer contacts the treasurer seeking reimbursement for a purchase or expense that has already been incurred by that volunteer. The treasurer then requests a vendor invoice from the volunteer and then writes a reimbursement check to the volunteer and records the transaction into the accounting records. The treasurer is often unfamiliar with the nature of the expenditure and the identity of the vendor.

General Operating Expenses

General operating expenses include items for which the chapter is directly billed after the service or item is received. The recurring expenditures include rent, utility, telecommunications and program supplies. Most bills are received via mail and rely on someone checking the mailbox and communicating the receipt of the bill to the treasurer, hopefully in time for the payment to be sent via mail to the vendor. Sometimes, due to lack of communication, bills are paid late and late fees are applied to the chapter’s accounts. Once the treasurer receives the bill, he usually pays it under the assumption that it is a valid expense.

For expenditures involving tangible goods, the person who uses the items is in charge of ordering the goods when they feel that such a purchase is necessary. They may or may not notify the treasurer in advance, and often times the treasurer learns of the expenditure upon receiving the bill. The treasurer sends payment to vendor with only the vendor invoice to support the transaction.

The treasurer and the chapter president are also given debit cards that can be used to make various, unanticipated expenditures. When the treasurer makes debit card purchases, the transaction is noted and recorded in the books. Debit card purchases made by the president may or may not be communicated to the treasurer. These undocumented transactions are eventually identified by the treasurer during the quarterly bank reconciliation of the chapter books and bank accounts. Both the treasurer and president can withdraw money from the bank’s ATM machine using a pre-established PIN.

Required:

1. After reviewing the acquisition and cash disbursement narrative above, identify three issues with the current process that are flawed and or non-existent.

Answer 1

Answer:-

1-Reimbursement of expenses should we covered under a management policy it is essential for every organization or business concern to make a policy regarding reimbursement of expenses that are already paid by any volunteer. The limit of the transaction is also be fixed under the policy and only some specific persons are only defined for do these transactions. this transaction is also made only by debit or credit cards and reimbursement is only given when the original payment slip and purchase invoice is submitted by the volunteer to the treasurer.

2-General Operating Expenses-From the above case there is a lack of company policy & communication regarding General operating expenses. Every general operating expense relating to the business is covered under the company policy & process. we can say that before booking an expense the document received should be self-explanatory it must be passed by proper defined authority and responsibility is also defined that the expenses are timely submitted to the treasurer so the late fees are not paid to the vendors.

3-Tangible Goods Expenses- From the above case before purchasing the goods it must be essential it should be pre intimated to the treasurer. A strict policy is made by company management to purchase tangible goods. Tangible goods purchase is also made through some specific persons only who are responsible for the purchase of tangible goods instead of the purchase done by the person who has required the material. It is also mandatory for every business concern that payment of tangible goods are only made through check or online payment instead of debit or credit card payment.