welcome to the expenditure cycle purchasing to cash dispersements now what is the expenditure cycle it's a recurring set of business activities and information processing operations associated with the purchase of and payment for goods and services in other words it's what it takes to purchase and pay for goods and services so the primary objective of the expenditure cycle is to minimize total costs of acquiring and maintaining inventories supplies and the various Services the organization needs to function management can achieve this objective through the four basic expenditure cycle activities these include ordering receiving approving supplier invoices and cash dispersements a fun easy way to remember these four activities is to remember to order Rees for approval and cash order Reeses for approval and cash and the Reese's are ordered in an X representing the expenditure cycle we'll now review an example of the expenditure cycle remember the law school and Jay dogs well after the law school placed its order Jay dogs needed to make sure it had everything necessary to fill that order such as enough dogs buns and Special Sauce oh sweet nectar let's watch the expenditure cycle in action as jgs orders addition additional buns from the bakery first jgs places an order with the bakery after that the order is processed the buns are received and at the end of the month the bakery sends an invoice now before that invoice is paid it must be approved once that goes through jayg disperses the payment for the Buns sounds easy enough but there are several threats that could happen throughout this cycle some general threats to this cycle are that JG could gather inaccurate or invalid Master data or during the cycle there could be some unauthorized disclosure of sensitive information or maybe they are losing or destroying valuable data and there could be poor performance throughout each process now we'll go over some specific threats to J dog's expenditure cycle J dog's purchasing clerk could be ordering from a bakery that has lower quality buns so he could get a kickback or J dogs could accept items that were never ordered they could also make duplicate payments for the same order well that sums up our overview in the following videos we'll talk about the process threats and controls for ordering receiving approving supplier invoices and cash dispersements but in the meantime remember to order Reeses for approval in cash