Tri-Plex Wholesale is a clothing wholesaler that sells name-brand clothing to de

Question

Tri-Plex Wholesale is a clothing wholesaler that sells name-brand clothing to department stores and boutique dress shops. The company sells to both one-time and recurring customers. A flowchart of the system will be attached with the label “Internal Control” when a file can be created. Meanwhile, proceed with this as Assignment AIS II to be filed next Thursday. Customer orders are received by fax and e-mail in the sales department. The sales clerk, who works on commission, approves the credit sale, calculates commissions and discounts, and records the sale in the sales journal from a PC in the sales department. The sales clerk then prepares a sales order, a customer invoice, and a packing slip, which are sent to the accounting department for processing. The accounting clerk updates the AR Subsidiary ledger and sends an invoice to the customer. The accounting clerk then forwards the sales order and packing slip to the Warehouse-Shipping Department. The warehouse-shipping clerk picks the items from inventory and sends them and a packing slip to the carrier for shipment to the customer. Finally, the warehouse-shipping clerk updates the inventory subsidiary ledger and files the sales order in the department. Cash receipts from customers go to the mailroom, which has one supervisor overseeing 32 employees performing similar tasks: a clerk opens the envelope containing the customer check and remittance advice, inspects the check for completeness, reconciles it with the remittance advice, and sends the remittance advice and check to the accounting department. The accounting department clerk reviews the remittance advice and checks, updates the AR subsidiary ledger and records the cash receipt (CR) in the cash receipts journal. At the end of the day, the accounting clerk updates the AR Control, Cash, and Sales accounts in the general ledger to reflect the day’s sales and cash receipts.

REQUIRED:

A) List at least 5 uncontrolled risks associated with this system as it is currently designed.

B) For each risk, describe a specific control to reduce the risk/weakness.

C) Draft a DFD or flowchart after your controls are implemented.

Explanation / Answer

3 team leads to report supervisor

5 Unctonrolled risk assosiated with the system as it is designed are as follows 1 In the sales department, Sales clerk approves credit sales, calculates commsion and discounts    Since the sales clerk is working on commission there is a risk - of him effectting sales for his benefits   Such sales can be at high discounts and large credit period, which would result in no. of sales increase but cash flow would decrease and profit would be adversely affected   2 Sales clerk - records sales in sales register form a PC in sales department Risk of sales personal punching wrong / rigged details of sales order in system 3 Accounting clerk updates the AR ledger and sends an invoice to the customer The risk on Accounting clerk updating wrong details in in AR register and sending modified invoice to customer There is no check in AR register being updated by correct sales number 4 The warehouse shipping clerk sends the item from the inventory and a packing slip to the carrier for shipment to customer Risk - no check on the quantity and quality of product sent by warehouse keeper to customer . No check on conformation of quality and quantity of product delivered by carreir to customer 5 One supervisor overseeing 32 employees performing similar task Risk - chance of suoervisory lossing track to performance of personal in a critical area as cash Control 1 In the sales department, Sales clerk approves credit sales, calculates commsion and discounts    Their should be segregation of duty here Terms and condition / credit terms / discounts should be approved by a person from other than sales department, preferably finance - as credit controller Credit controller - should be incentivised on - conversion of AR to cash Discount to be allolwed - should be aproved by sales heads Commision of sales personal to be calcuated on sales figure instead if no. of sales order. Sales clerk - records sales in sales register form a PC in sales department 2 Thers should exist segregation of duty - Sales order should never be punched by sales personal, preferably - Finance commercial should handle such role Accounting clerk updates the AR ledger and sends an invoice to the customer 3 Accounting cleck to update the AR register and hand it over to sale clerk to send it to customer 4 The warehouse shipping clerk sends the item from the inventory and a packing slip to the carrier for shipment to customer Copy of sales order and packing slip to be prepared in quadruplicate by sales clerk Sales clerk to send four copies to accounts clerk Accounts clerk to keep three and return one after stamping and signing to sales clerk Accounts clerk to send three copies to warehouse clerk Ware house clerk to keep two and retrun one to accounts department after stamping and signing Warehouse clerk to give two copies to carrier Carreir to keep one and return one copy after taking customers signature to warehouse keeper 5 One supervisor overseeing 32 employees performing similar task 32 employees to be grouped into teams of 9 - 10 members each each team to have a Team lead

3 team leads to report supervisor

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.