P2P Cycle Audit – Interactive Class | AICITSS Unit 4

AICITSS · Unit 4 · Chapter 1

⚙️ P2P Cycle Audit
Interactive Class

Learn to audit the Procure-to-Pay Cycle in Oracle Cloud Fusion ERP

Progress: 0%

📌

Why is P2P Cycle Audit Important?

Understand the complexity and risks in the procurement process

      🎯 Chapter Objective: Understand how to audit the Procure-to-Pay (P2P) cycle within Oracle Cloud Fusion ERP and identify irregularities at each stage.
    

📖 What is P2P Cycle Audit?

Procurement is the most complex process in any business — it spans from supplier selection all the way to the final payment, involving multiple people and departments at every step. Even though ERP solutions offer process automation, auditing the entire purchasing flow remains essential. Auditors must conduct analysis within the system itself, since ERPs eliminate the traditional paperwork.

⚠️

6 Key Reasons — Why P2P Needs an Audit

These are the risk areas that a P2P audit is designed to catch

Purchases from Unauthorized Suppliers — Procuring goods from unapproved or unlisted vendors

Non-Purchase Orders — Placing orders without creating a formal Purchase Order document

Unmatched Invoices — Invoices that are not linked to a Purchase Order (PO) or Goods Receipt Note (GRN)

Payment Without Delivery — Making payment to a supplier before goods or services are actually received

Late or Unpaid Invoices — Outstanding invoices that are overdue or were never settled

Transactions Without Proper Approval — Transactions processed without going through the required authorization chain

💡 Key Takeaway for Auditors

Since ERPs eliminate physical paperwork, auditors must perform all analysis within the system itself. This makes ERP-level audit skills — especially in Oracle Cloud Fusion — absolutely critical for today’s CA professionals.

🔄

The 6 Steps of the P2P Process

Click on each step to expand Oracle navigation & audit checkpoints

💡 Tip: Click on any step below to reveal the Oracle Cloud Fusion navigation path and key audit points for that stage.

Create Purchase Requisition (PR) Step 1

Employee initiates the buying process with an official internal request document

Navigation: Procurement → Purchase Requisitions
Click More Tasks dropdown → Select “Request Noncatalog Item”
Enter requisition details (item, quantity, price) → Click Add to Cart
Open Cart → Click Review to verify all details
Click Submit — PR is submitted for approval

✅ Audit Checkpoint: Who created the PR? Who approved it? Was it an authorized user? Check the approval hierarchy is being followed.

Create Purchase Order (PO) from Requisition Step 2

A legal document defining the sale terms — created after a quotation is accepted

Go to Tasks → Click “Process Requisition”
Search for the requisition → Click Add on Document Builders
Select the line → Click OK → Click Create
A PO number is generated — verify all details (price, qty, supplier)
Click Submit — PO is sent for Manager approval

✅ Audit Checkpoint: Does the PO match the PR in terms of price, quantity and supplier? Every PO must trace back to an approved PR. Check manager approval is in place.

Receive Goods (Goods Receipt Note – GRN) Step 3

Vendor delivers goods/services → receipt is recorded in Oracle

Navigation: Procurement → My Receipt
Search using PO or Requisition number → Select the line
Click the Receive button
Enter the received quantity → Click Submit
A Receipt Number (GRN number) is automatically generated

✅ Audit Checkpoint: Does the ordered quantity equal the received quantity? Receipt (GRN) must exist before any payment is made. Check for split receipts or short deliveries.

Create Payable Invoice (Matched to PO) Step 4

After goods receipt, vendor invoice is created and matched to the PO

Navigation: Payables → Invoices → Create Invoice
Search using PO number → Select “Match Invoice Line” → Click GO
Select the PO line → Click Apply → OK
PO line details automatically populate in invoice lines
Click Invoice Actions → Validate — invoice is now validated

✅ Audit Checkpoint: Perform 3-Way Match — Invoice amount = PO amount = GRN quantity? This is the most critical audit step in the entire P2P cycle.

Manage Invoices Step 5

Search, review and verify invoices in the system

Navigation: Payables → Invoices → Manage Invoices
Enter the invoice number → Click Search
Verify invoice details, status, amounts and matched documents

✅ Audit Checkpoint: Look for duplicate invoices. Flag any unvalidated invoices. Check if invoices are being processed within the payment terms deadline.

Invoice Payment to Supplier Step 6 — Final

The last step — payment is released to the vendor. The P2P cycle ends here.

Navigation: Payables → Payments
Click Create Payment button
Enter mandatory details (supplier, payment method, bank account)
Search invoice by invoice number → Apply it to the payment
Click Save and Close — payment is confirmed
Go to Actions → View Accounting to check journal entries

✅ Audit Checkpoint: Was the payment made by an authorized user? Does the payment amount match the invoice? Check for duplicate payments — same supplier, same amount, same period.

📊

Key Reports in P2P Cycle

Reports used by auditors during a P2P audit

🔍 Manage Payments — Audit Drilldown

Users can search for a specific payment using the payment number or supplier name. Clicking the invoice number under the Paid Invoices tab allows you to drilldown from the payment all the way to the invoice and distribution entries — an extremely powerful tool for auditors tracing fund flows.

📈 Supplier Balance Aging Report

Provides a breakdown of supplier balances across aging buckets configured by the organization. Used to identify overdue payments and outstanding liabilities.

→ Use for: Identifying unpaid or overdue invoices

📄 Payables Invoice Register

Provides detailed information about invoices. Can be run for a specific invoice group, date range, or accounting period. Allows filtering by invoice status: validated or canceled.

→ Use for: Full invoice audit trail

🔐

Fusion Audit Configuration

How to enable system-level change tracking in Oracle Fusion

⚙️ How to Enable Auditing in Oracle Fusion

Note: Auditing is OFF by default — it must be manually enabled
Step 1: Open the Setup and Maintenance work area (Functional Setup Manager)
Step 2: Search for “Manage Audit Policies” → Open the page
Step 3: Set Oracle Fusion Applications Audit Level to “Auditing”
Step 4: Click “Configure Business Object Attributes” → Choose products (Payables, Receivables, etc.)
Step 5: Select attributes to audit → Click Actions → Synchronize → Save and Close

📋 How to View Audit Reports

Path: Navigator → Tools → Audit Reports
Specify: Date Range (required), User, Product, Business Object Type
Click Search to see all tracked changes in the results table
Results can be exported to Excel for further analysis

📌 Auditing for Payables — Special Note

After enabling the Audit Top Node, some business objects (e.g., Financials OptionVO) require you to manually select which attributes to audit
Select the object → Actions → Create → Move attributes to “Selected Attributes” box
Always click Synchronize after any changes — especially after patches or updates
Flex field attributes (chart of account values) are included by default but still require synchronization

🃏

Flashcards — Revise Key Terms

Click the card to flip and reveal the definition

Term / Concept

Loading…

Definition / Explanation