Reference no: EM132651708
Question - Sales Order Processing Procedures
When the customer wants to place an order, he or she typically calls it in so that the items are ready to be picked up at their convenience. During the call, the sales department desk clerk fills out a blank sales order form according to the customer's needs. Following the call, the desk clerk checks the customer's creditworthiness on a computer terminal. When the customer's credit is verified, the clerk stamps the sales order approved. He then hands off the approved sales order to the sales manager for further processing.
Once the sales manager receives the approved sales order, he reviews it and places it in an in-process bin on his desk. This bin contains all the approved sales orders from the entire business day. At the end of the day, the sales manager keys in all of the approved sales orders for the day into his computer terminal. When all sales orders are entered, the clerk clicks the Confirm and Save button. This triggers the overnight batch process, which produces an electronic copy of each sales order. This electronic copy is distributed to computer terminals of their respective parties overnight so they are ready by the next morning. One copy of the electronic sales order is sent to the manufacturing department; another is sent to the shipping department; and a third is e-mailed to the customer for their personal records. This process also automatically updates each individual customer record file on the sales department's computer to reflect the transactions. The hard copy of the approved sales order is filed in the sales department.
When the warehouse manager arrives in the morning, he logs on to the department terminal and reviews all electronic sales orders from the prior business day. He prints out two copies of the electronic sales order to use as a stock release and a shipping slip, respectively. Using the stock release, the warehouse clerk picks the selected goods from the shelves. The goods, accompanied by both documents, are sent to the shipping department. The clerk then goes back to the terminal and updates the inventory subsidiary ledger and the general ledger.
Once the shipping clerk receives the goods, the stock release, and the shipping slip, he matches them to the corresponding electronic sales order contained in his terminal's inbox. Assuming everything matches, he prints out a hard copy of the sales order, which the clerk then uses to prepare three copies of the bill of lading (BOL). Two of these copies, along with the shipping slip, are sent along with the goods to the carrier. The stock release is sent to the AR department. The other BOL copy, along with the sales order, is filed in the shipping department.
When the AR clerk receives the stock release, he has sufficient information about the sale to create sales invoice, which is immediately mailed to the customer. After mailing the invoice, the clerk goes to his terminal and updates the sales journal, AR subsidiary ledger, and general ledger from the information on the stock release. After the records are updated, the stock release is filed in the AR department for audit trail purposes.
Cash Receipts Procedures
At Bait 'n Reel, the entire basement has been converted into a mail room. The postmaster has been faithfully working for the company for over five years and has the duty of collecting all incoming mail. For customer payments, he opens the envelope, collects the customer's check and remittance advice, and reconciles the two documents. To ensure that payments are not lost, he also creates two copies of a remittance list. One copy of this remittance list is sent to the AR department along with the corresponding remittance advices. The other copy of the remittance list accompanies the checks to the cash receipts department.
Once the checks and remittance list arrive in the cash receipts department, the assistant treasurer reconciles the documents, signs the check, and prepares three copies of the deposit slip. He then updates the cash receipts journal and the general ledger on his computer terminal. After he updates these records, the signed check and two copies of the deposit slip are sent to the bank. Meanwhile, the third copy of the deposit slip and the remittance list are filed in the department. When the AR clerk acquires the remittance list and remittance advices from the mail room, he reconciles the two documents. He then uses his terminal to update the AR subsidiary ledger and the general ledger. Once he does so, the two documents are filed in the department.
Required -
a) Simple Activity Diagram of the current business process.
b) Collaboration Activity Diagram documenting the current process. Use pools and swimlanes in your solution.
c) Analyze the current process and identify at least five internal control weaknesses. In addition to describing the control weaknesses, mark the location of each control weakness on your diagram(s) of the current system.