Chapter 3: Purchase to Pay

Structuring Effective Controls Over the Five Primary Transaction Cycles

This is one part of a series designed to help organizations identify risks and improve internal controls over financial reporting. Click here to access the rest of the series, including a set of five downloadable tools organizations can use to help assess their own controls.

Internal control over financial reporting (ICFR) is an integral element in every financial leader’s toolbox. Having the right controls, properly implemented, allows leaders to ensure that they have timely, accurate and complete financial information to make informed decisions. Weaver designed this guide as a roadmap to help any organization, regardless of industry, understand these cycles, the specific processes and subprocesses you need, and controls you can implement to manage your financial risks. It will also walk you through a step-by-step analysis of financial and operational risk and control considerations for the five primary cycles.

The five primary cycles are universal, in that every organization has them. However, every organization is unique in its exact processes and needs. As you use this guide and the downloadable risk-control matrices, you will need to examine your own processes to customize controls for your operations, while eliminating what is unnecessary.

What’s Inside?

This chapter, Purchase to Pay, describes the processes, risks and recommended controls associated with selecting and purchasing supplies, inventory and services. Your organization may have a formal procurement department or a much simpler purchasing process; either way, you must select vendors, buy supplies, pay invoices and reimburse employee expenses.

Download the corresponding Risk–Control Matrix, which includes common processes, risks and controls that you can customize to your organization’s specific needs.

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Download the Complete Set

In addition to this chapter, Structuring Effective Controls over the Five Primary Transaction Cycles includes an overview and four additional chapters with information about the other transaction cycles. It also includes illustrative risk–control matrices for all of the five cycles that you can use to help identify and begin closing gaps in your own controls.

• Structuring Effective Controls over the Five Primary Transaction Cycles: Overview
• Chapter 1: Treasury and Cash Management
• Chapter 2: Sales to Collection
• Chapter 4: Human Resources and Payroll
• Chapter 5: Financial Close and Reporting