Describe the weaknesses that exist in Alden’s expenditure cycle. There are three performances that take place in the expenditure cycle: ordering items, receiving the items and paying for those items.
The weakness that the Alden’s have is that they do not have an inventory control method, which means they just estimate what they need at the end of the month and purchase items. Another weakness is that they do not keep record of the inventory that is brought in and the inventory that leaves the storage.Having any clerk perform the physical count is also a weakness because there are too many different people in charge which could mean different data is being entered and there is no set date of when the inventory is counted, the beginning or at the end of the month. Also, the supervisor reused a scheduled reorder to order his inventory which could be harmful because maybe one month they were not as busy and another month so they could be short on supply. When receiving the inventory, the accounts payable clerk is not giving the bill to account for the inventory in the file.Instead the storeroom clerks should receive it and file it away in the storeroom where no one else has access to it. Suggest control procedures to overcome the weaknesses noted in part a.
Alden’s expenditure Essay Example
Instead of guessing how much inventory is needed, the supervisor needs to identify what, when and how much to purchase through a process.