Expenditure Process of Platinum Manufacturing Group Enterprise

This paper discusses the expenditure process of Platinum Manufacturing Group Enterprise, including the buying procedure, data flow diagram, backlogs, impacts, internal controls, and advancing methods.

Running head: EXPENDITURE PROCESS
Expenditure Process
Name of the student
Name of the University
Author Note

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Table of Contents
Introduction..........................................................................................................................3
Buying Procedure................................................................................................................3
Data Flow Diagram..............................................................................................................5
Backlogs..............................................................................................................................6
Impacts.................................................................................................................................6
Internal Controls..................................................................................................................7
Advancing Methods.............................................................................................................7
Conclusion...........................................................................................................................8
References............................................................................................................................9

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Introduction
This paper is about the expenditure procedure of the Platinum Manufacturing Group
Enterprise which is one of the most prestigious organisation. The report deals with the special
orders that the organisation buys from the dealers. In the recent years the organisation has
bought special orders worth the amount of the over $13 million. The organisation leader that is
the CEO wants to properly understand the expenditure process and enhance the sales of the
organisation (Stiglitz & Rosengard, 2015). Also, the CEO wants to improve the process of
buying the equipment’s and the betterment of the process of the same. In order to do, the
information provided is summarised in the given paper. This includes the buying process,
receiving process and treasurer and the accounts department approval of the process. Further a
level 0 data flow diagram of the task is also included in the document for the better
understanding of the process. The risk that is the backlogs of the entire system is also discussed
in the given paper. The internal control measure which can be done in order to improve the
process of the buying is also a part of the report.
Buying Procedure
The platinum manufacturing Group which is one the most prestigious business
organisation. The organisation follows a well-developed a maintained expenditure process for
the organisations special orders that are bought by the organisation. The special orders which are
generally for the low volume orders that is the orders in the less quantity of the department
managers (Becker & Egger, 2013). In order to purchase the demands from the equipped

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departments, the request for buying is initially sent to the purchasing department, the purchasing
department then checks for the is the order is indeed placed by the head of the department and no
one other. when the department get the confirmation about the product, the purchase requisition
buyers finds a suitable dealer and finds the product and the verification call for about the
availability and the price of the product (Dumas et al., 2013). The buyer then calls the seller, asks
for the mentioned price quote, and places a verbal order, that is the order is taken over phone and
there is no written copy of the product. In order to take the order a pre-numbered purchase order
is processed, with the original sent to the supplier and copies to the department head, receiving,
and accounts payable. After the completion of all the processes, when the work of the receiving
department starts. The receiving clerk checks for the quantity and the quality of the product, and
if there is any mismatch with the order the clerk marks the product with red ink and forwards the
product to the concerned department. The clerk also gives a stamp on the product and sends it to
the requisition department, receiving department and verbally confirms the order status. After
receiving the purchase order history, the clerk writes the order details in the open purchase order
file and when the invoice for the same is received the clerk matches the it with the with the
required order purchase the amount of the payable is debited from the requisitioning
department’s equipment account. Also, the unpaid orders whose payments are yet to be paid are
noted a due orders and check regarding the same is forwarded to the treasurer for signature. After
the completion of this process the invoice and purchase order are then filed by purchase order
number in the paid invoice file (Lohrmann & Reichert, 2013). The work of the treasurer
departments work is only to pass the order and sign the checks. This department divides all the
checks in to two segments, the checks which are above the amount of $10000 and the orders that
are less than $10000. The orders which are below the sum of the $10000 is machine signed and

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check by the cashier but the order that above the given sum are thoroughly checked and then
signed by the cashier and forwarded to the treasurers. After the tressure’s signs the check, it is
forwarded. Although the process of taking a special order seems to be very complicated but all
these things are done in a very swift way and the order is processed within day of being ordered
by the customer and hence giving a better customer satisfaction and increasing the value of the
organisation.
Data Flow Diagram
A data flow diagram can be said as the is a graphical illustration of the "flow" of data
through an data system, modelling its process aspects (Fagbola, T. M., Adigun & Oke, 2013).

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(Figure-1- Level 0 Data Flow Diagram)
(Source: Author)
Backlogs
Although there the process of taking orders are very enhanced and advanced of the
organisation but there lie some loop holes in the system which can cause problems to the
organisation and make loss for the same also. Some of the problems that the organisation faces

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are while giving the orders and receiving the orders (Mitra, Jaggi & Hossain, 2013). That is
when the organisation is giving any special order the order is taken the order is noted down
verbally, this can cause problems in the orders future as if the order is processed and the seller
refuses for the order, can cause problem. This can cause loss for the organisation. Also, every
order is kept hand written and can cause problems if the papers are messed up. Also keeping a
track of each and every order can cause problems and chaos for the organisation. The installation
of the products can cause problems, supposing if the organisation order something the there is no
technical who can properly fit the instruments can cause a loss for the organisation (Hilton &
Platt, 2013). Other than this storing the materials is also one of the major problem that the
organisation faces, if lumpsum number of order are placed then the area for storing the same also
decreases and hence storage problem occurs.
Impacts
These problems can cause huge loss in the organisations expenditure cycle. Like if the
organisation is in a need of a certain item and the delivery of the item is yet not completed can
cause stoppage to the production in the organisation and hence losses. Also like if the item is
delivered and yet not working then also may cause serious problems like the space issues and
other related problems (DRURY, 2013).
Internal Controls
Specific Internal control can be defined as a process intended to deliver realistic
guarantee concerning the achievement of objectives in the following categories, 1st is the
Effectiveness and efficiency of operations in a particular organisation. 2nd is the Reliability of
financial reporting related to the organisation and finally the 3rd is Compliance with applicable
laws and regulations. There are two types of the internal controls, namely the Preventive and

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Detective Controls. The working of these controls is different from one another. Preventive
controls try to avert or prevent unwanted procedures from happening. These are practical
controls that eradicated any loss (Rahman, 2013). In this organisation the preventive controls that
might be helpful are proper authorization of the bulk materials, adequate and proper
documentation of the items that are ordered, and physical control over assets after the orders are
received. On the other hand, the detective controls are the attempts to detect any undesirable acts
(Christensen et al., 2015). Detective controls which can be implemented in the organisation are
reviews of the products before ordering, analyses of the products and audits of the items. Both
the types of the controls are essential in order to an effective internal control system and to avoid
any kind of loss.
Advancing Methods
If the organisation updates the systems of the working, then there may less chances of
any error in the order processing systems(Warren, 2016). The system that the organisation
follows must be updated in order to have a better ordering process, like the new technologies like
bar code scanners and the EID’s(Electronic data interchange, which is the concept of businesses
collaborating electronically) and the EFT ( Exchange trading fund) can help the organisation in
eradication the old techniques of the pen and paper systems that it followed.
Conclusion
Thus, concluding the topic, it can be said it can be said that all though the organisation is
having a very well-structured expenditure process for buying of the special goods, but needs to
improve the process of the same in order to improve the management of the goods. The previous
expenditure process had some backlogs which are highlighted in the paper and measures to
eradicate those are provided in the paper. The data flow diagram given in the paper slows a clear

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image of the previous process of the expenditure. The organisation can import goods in bulk that
is the goods that are required by every department in common, this will in turn reduce the cost
for the transitions the installation and help the organisation to save some good amount of money.

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