Accounts Payable System: Accounts Payable Master File and System Tables - Part 8
This is the 8th article in a series about Accounts Payable. This material is adapted from The Automated Accounting Systems and Procedures Handbook (John Wiley, New York 1991) Chapter 6.
ACCOUNTS PAYABLE MASTER FILE
Vendor invoices and related activity, such as credit memos, are posted to the accounts payable master file as voucher records according to the batch and related procedures described earlier. Because this file retains individual vouchers, many people refer to this file as the voucher master file. Posted voucher records remain on this file until the voucher is paid and/or a designated amount of time (six months, for example) has elapsed. At that time, they are removed and posted to the accounts payable history file. The amount of time that paid, completed vouchers remain on the accounts payable master file is usually controlled by a parameter in the company table.
Through master file maintenance, the system may allow certain information on these records, such as payment due date or bank account code, to be changed. But altering other information may be disallowed depending on the status of the voucher. For example, it would not be possible to alter the general ledger distribution after the operator posts the record to the accounts payable master file. This can be done only when the voucher is in an unposted batch. Because of the balancing, approvals, and related checks and balances that have occurred prior to posting, the system will not allow any changes to a majority of the fields on the voucher. For this reason, voiding a voucher is a common measure for correcting problems that file maintenance cannot solve.
The system will, however, allow inquiry on the complete voucher information that is retained on file. The system usually presents this information in a screen similar to the one used for voucher creation. System security restricts access to all voucher inquiry and maintenance features so that only accounts payable accountants and other authorized personnel may view voucher information.
VOUCHER HISTORY
Paid and completed vouchers may remain on the accounts payable master file until a specified amount of time (designated in the company table) passes. At that time, the system moves these vouchers to the voucher history file. In a modern system, the voucher history file retains complete information about paid vouchers, including information regarding the voucher's purchase order matching, its general ledger accounting, and its approval. These files grow over time, making it necessary to occasionally purge them to computer tape or similar long-term storage media.
As an audit trail, the system may permit automatic reporting of voucher records moved from the accounts payable master file to the history files. However, this report generally has limited use for informational purposes and should be used only for special circumstances, such as testing or auditing. The electronic audit trail of records in the voucher history file itself serves as an appropriate audit trail and does not require an equivalent paper backup.
Benefits and Uses of Voucher History Information. Storing paid and completed vouchers on a voucher history file, apart from the accounts payable master f file, offers some useful flexibility:
1. To increase processing efficiency, the accounts payable master file is kept much smaller than it otherwise would if all history information were stored there as closed vouchers.
2. The system may reduce the amount of information stored with the vouchers as they are moved to the history file. For example, some systems strip off the general ledger distribution information as the voucher is moved to the history file (effectively losing this information).
3. The system may provide special search and inquiry functions for accessing the history information that are not available for querying and reporting on accounts payable master file vouchers.
This history information generally serves a variety of informational needs, providing quick answers to simple questions regarding paid vouchers. In addition, voucher history information can support special studies, such as
• Examining discounts being taken or lost by the accounts payable department.
• Studying the occurrence of late payments.
• Studying the breakdown of disbursements by vendor class or geographic area.
• Performing cash disbursement seasonality or trend studies.
• In conjunction with purchase order history, examining vendor invoice variances from quoted purchase price.
The voucher history file and the system's linkages to corresponding purchase order and receiving information help create the appropriate electronic audit trails that replace completed paper vouchers. With on-line access to historical invoice (voucher), purchasing, and receiving information, the accounts payable department has no need for storing paper vouchers, purchase orders, packing slips, and check copies. Without such a paper audit trail, naturally this electronic information must be backed up and saved before it is purged from the history file.
Accessing Voucher History. The system allows secured access to accounts payable voucher history either through on-line inquiry or via printed report. To choose vouchers for display or printing, the operator can use a selection screen similar to the one used for vendor selection, except that it shows the appropriate fields for voucher selection (Figure 6-20).
Based on the criteria entered in this screen, the system can display all selected vouchers, one line per voucher, and allow the operator to select a voucher from this list for detailed viewing. This produces a display, such as the voucher history record shown in Figure 6-21. As this example implies, the system should allow the operator access to purchase order and payment history information associated with a particular voucher. To bypass this selection screen, the system can allow direct access to voucher history records using the voucher number.
On request, the system can prepare a printed listing of voucher history information from the detailed records selected using the selection screen in Figure 6-20. The system may allow the operator to request that the listing include matched purchase order detail, payment detail, and/or general ledger distribution detail for reported vouchers.
ACCOUNTS PAYABLE SYSTEM TABLES
Modem accounts payable systems use tables, or small files, to store related information that supports specific system features and functions. The names and specific use of these tables may vary somewhat from one accounts payable system to another, however, the following names and functions generally apply:
• The company table stores specific policy information and options for each company set up on the accounts payable system.
• The terms table retains information used to compute vendor payment due date and discount amount.
• The tax table stores information about taxing authorities including accrued amounts that have been withheld during voucher or payment processing.
• A general ledger interface table may retain information used to distribute accounts payable activity to the general ledger.
• The approval table stores information on users who are authorized to approve invoices, including user ID and corresponding approval levels.
• The calendar stores dates that are relevant to the accounts payable processing cycle: business days, holidays, check run days, etc.
• The bank table retains information about different banks and bank accounts that are used for funds disbursement.
• The 1099 table holds a list of valid 1099 codes, used to classify payments for government reporting purposes.
Of these tables, the company table plays the most visible role. It contains information about policies, options, defaults, and other information related to specific companies set up in the accounts payable system. In this sense, a “company” is a logical entity that is defined by a unique record in the company table. A different company can be created for
• Each separate profit center or accounting entity.
• Each class of payables that requires different accounting treatment, such as office supplies versus purchased inventory.
• Each class of payables that requires different defaults, options, or policies.
As an example, some businesses set up two companies, one for trade payables and one for administrative payables. This can be a very convenient approach when the treatment of these two different classes of payables involves different general ledger liability accounts, different approvals, etc.
Good use of the company table occurs when the options and policies in each company table record efficiently support the accounts payable processes. For example, if invoices generally have three terms, COD, 1 10 Net 30, and Net 30, it may be inappropriate to define one accounts payable company with the default terms as Net 30. Using three companies will allow each of these terms, as well as other company-related default information, to be appropriately conveyed to each new voucher simply based on the voucher's company number.
Some businesses occasionally must process a given vendor's invoices under either of two different accounts payable companies. This may he useful, for example, if one vendor sells to two different departments, each with unique accounting and approval requirements. To support this requirement, the system should associate the company number with individual vouchers rather than with particular vendors. The company number may reside on the vendor master file. But only to convey a default company number to any invoices for that vendor. This default may be overridden on particular invoices to meet this “single vendor, multi-company” requirement.
Figure 6-16 Typical Hierarchy of Data Elements Conveyed to the Invoice.
| Company Table | Vendor Master | Batch Header | Purchase Order | Invoice |
| Defaul invoice accounting | | | | | |
| Freight proration indicator | x | x | x | | |
| Tax proration indicator | x | x | x | | |
| Invoice date | | | x | | x |
| Authorization and control | | | | | |
| Tax allowed indicator | x | x | x | x | |
| Freight allowed indicator | x | x | x | x | |
| Quote tolerance | x | x | | x | |
| Approvals required | x | | | | |
| General ledger interface | | | | | |
| AP liability account | x | x | x | x | x |
| Distribution account | x | x | x | x | x |
| Tax accounts | x | x | x | x | x |
| Freight account | x | x | x | x | x |
| Discount account | x | x | x | x | x |
| Intercompany account | x | x | x | x | x |
| General ledger period | x | x | x | x | x |
| Policy information | | | | | |
| Company number | | | x | | |
| PO match indicator | x | x | | | |
| Hold payment indicator | x | x | x | | x |
| Bank account code | x | x | x | | x |
| 1099 code | x | x | x | | x |
| Foreign currency code | x | x | x | | x |
| Terms code | x | x | x | | x |
| Intercompany indicator | | x | | | x |
Figure 6-16 shows some of the information that can be conveyed from the company table to the invoice during voucher creation. Besides this voucher-specific information, company table records can also retain information on report printing and formatting, retention of voucher history records, accounting periods, and payment processing. Figure 6-22 shows a screen for company table maintenance.
Next Month's topic: Special Features and Requirements
| About this article and the author: |
Doug Potter is the owner of The Newport Consulting Group a professional management consulting organization that provides clients with information systems planning, selection, and implementation services. He can be reached at dpotter@newportconsulting.com or through his Web site, http://www.newportconsulting.com.
Note: The contents of this article were excerpted from Mr. Potters book "Automated Accounting Systems and Procedures Handbook" Copyright 1991 by Douglas A. Potter, published by John Wiley & Sons, Inc. New York
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