What Is a Requisition in Accounting?

A requisition in accounting is an internal document used by an organization to formally request the purchase of goods or services. It acts as the initial step in the procurement process, indicating a need from one department to another, typically the purchasing department. This document helps standardize and control spending within a company by ensuring all internal approvals are obtained before any external action.

Purpose in Accounting

Requisitions are fundamental to maintaining robust internal controls over expenditures. They ensure all spending is properly authorized and aligns with established budgets, preventing unauthorized purchases. This process creates a clear audit trail, documenting the necessity and approval of every expense from its inception. By formalizing requests, requisitions enhance accountability across departments and help manage financial resources effectively.

Key Information Included

A requisition form includes key information for accurate processing and approval. It identifies the name and department of the individual making the request, along with the date of submission. A detailed description of the items or services needed, including quantities and estimated costs, is also provided. The form often includes a suggested vendor, if known, and a clear justification for the purchase. Spaces for authorization signatures, such as a departmental manager or budget approver, are also a standard feature.

The Requisition Workflow

The requisition workflow begins when a department identifies a need for goods or services and completes the internal request form. This form is then submitted to a direct supervisor or department head for initial review and endorsement. Following this, the requisition may proceed to a budget owner or financial controller to ensure funds are available and the request aligns with budgetary constraints. Once all necessary internal approvals are secured, the authorized requisition is forwarded to the purchasing department. The purchasing department then uses this approved document to initiate the external purchasing process.

Requisition Versus Purchase Order

A requisition is an internal document, signifying a request from one part of the organization to another, usually the purchasing department. In contrast, a purchase order is an external document issued by the purchasing department to a vendor, formalizing the commitment to buy specific goods or services. The requisition precedes and triggers the creation of a purchase order. While a requisition is a request, a purchase order is a legally binding agreement with an external supplier.