Reference no: EM131698253
Overview of the Revenue Cycle from the CFO
Motherboards and More Pty Ltd is a medium size, privately owned, Australian enterprise. They manufacture computer parts including microchips, motherboards and graphics cards and are a key supplier to computer manufacturers and repairers across Australia. Motherboards and More Pty Ltd is 8 years old and uses an integrated ERP system. The administrative offices are in a central city building with the production, shipping, and receiving departments located on the outskirts of town, just 10 minutes away.
Customers place orders on the company’s website, via email, or by telephone. All sales are on credit. This year, sales have increased significantly, with 18% of credit sales needing to be written off as uncollectible. This included several large online orders to first-time customers who denied ordering or receiving the merchandise.
Customer orders are picked and sent to the warehouse, where they are placed near the loading dock in alphabetical sequence by customer name. The loading dock is used both for outgoing shipments to customers as well as receiving incoming deliveries. There are ten to twenty incoming deliveries every day, from a large number of sources.
The increased volume of sales orders has resulted in a large number of errors where customers have been sent the wrong items. There have also been delays in shipping as items that supposedly were in stock could not be found in the warehouse. Although a perpetual inventory is maintained, there has been no physical count of inventory for over two years. When an item is missing, the warehouse staff notes the information down in a log book. At the end of the week, the warehouse staff uses the log book to update the inventory records.
The system is configured to prepare the sales invoice only after shipping employees enter the actual quantities sent to a customer, thereby ensuring that customers are billed only for items actually sent and not for anything on back order. Terms of trade are payment within 14 days of invoicing, with a 2% discount offered for payments made within 3 days. Approximately 50% of Motherboards and More long standing repeat customers pay within the 3 days.
Using the information provided to you by the CFO, you need to prepare a business report to him including the following:
A summarised overview of the Revenue Cycle, from order to invoicing, for Motherboards and More [this should be no longer than one (1) paragraph. The CFO is already aware of the cycle, but this overview helps bring your report together for other readers]
Identification of;
internal control weaknesses in Motherboards and More Revenue Cycle;
the impact these weaknesses could have on the organisation?
specific internal controls which could be implemented by Motherboards and More in the coming weeks to mitigate the risks posed by the internal control weaknesses you have identified. Your CFO does not want theoretical controls suggested. They want practical controls that they can implement within the organisation. (5 marks) [Note: all three (3) parts of question two (2) should be included as a table in your report]
A brief overview of the Ransomware attack.
A detailed review of appropriate controls which you would recommend be implemented at Motherboards and More to protect the organisation from a potential Ransomware attack similar to the one experienced in the article provided to you by the CFO. These could consist of both application and general controls. In your recommendations, you need to consider which controls are the most appropriate for your client.
The application of appropriate academic writing skills . This includes use of appropriate grammar and spelling, application of APA referencing and a report presented in a professional manner.