A co-worker and I are having a little debate that I was wondering if you could clear up for us. It is regards to approval to pay. The situation is that we use an online supplier where employees will place their order online. During the order they are stating the account to be charged and the requisition is then routed to the appropriate management to be approved. Once approved the order is placed to the online supplier who charges a pcard. These are all low dollar office supply items and are not "received" into a system formally.
Her argument is that someone needs to print off the pcard transaction log each month and sign it as proof of "approval to pay". My argument is that there is no value in such an activity as the person has no idea whether the things have been received or not and truly is doing nothing more than rubber stamping the log. My contention is that the management is approving payment when they approve the order. They are approving the expenditure of company funds at that time and the need to print a transaction log and sign it is non-value added.
Now... the question may arise of "how would you ever know if the supplier wasn't adding charges to the card against orders that were never officially made?". And to be honest I don't have a great answer to that other than 1) it is low dollar transactions, 2) there has to be some level of trust in a relationship, and 3) periodic audits, while maybe not as thorough, would eventually catch such a thing if it did occur and require much less tactical time from an employee.
Thoughts? I'm not an accountant so do not know how this relates to GAAP but would guess that GAAP doesn't go into such detail.