Question: A company has various rules for how payments to suppliers are to be authorized. Some payments are in response to an approved purchase order. For approved purchase orders under $5,000, the accounting clerk can immediately issue a check against that purchase order and sign the check. For approved purchase orders between $5,000 and $10,000, the accounting clerk can immediately issue a check but must additionally obtain a second signature. Payments for approved purchase orders over $10,000 always require the approval of the accounting manager to issue the check as well as the signature of two accounting clerks. Payments that are not covered by a purchase order that are under $5,000 must be approved by the accounting manager and a departmental manager that will absorb the cost of the payment into that department’s budget. Such checks can be signed by a single accounting clerk. Payments that are not covered by a purchase order that are between $5,000 and $10,000 must be approved by the accounting manager and a departmental manager, and the check must have two signatures. Finally, payments exceeding $10,000 that are not covered by a purchase order must be approved by a department manager, the accounting manager, and the chief financial officer. Such checks require two signatures. Use a decision table to represent the logic in this process. Write down any assumptions you have to make.

SOLUTION

Conditions/Courses of action | Rules | | 1 | 2 | 3 | 4 | 5 | 6 | Purchase Order | Y | Y | Y | N | N | N | Purchase Amount | S | M | L | S | M | L | | | | | | | | One Accounting Clerk Signature | X | | | X | | | Two Accounting Clerk Signatures | | X | X | | X | X | Accounting Manager’s Approval | | | X | X | X | X | Departmental Manager’s Approval | | | | X | X | X | Chief Financial Officer’s Approval | | | | | | X |

Where Y is for Purchase orders that has been approved and N is for Purchase orders yet to be approved.
Purchase Amount Rules: S = <$5000; M = $5000 – $10000; L = >$10000