Sale Order Procedures

Discount Tool's revenue process is initiated when a customer places an order either online, by mail or through a telephone representative. Online orders are entered automatically by the system, mail and phone orders are manually entered. When the customer order is entered, the system automatically performs an online credit check. If credit is approved, the sale process continues. If the credit is denied, the process ends, and the customer is notified of the automatic rejection.

For approved orders, the clerk manually prepares four hard copies of each sale order. The clerk then enters the sale into the digital sales journal from his terminal and files one copy of the sale order in the sales department. A second copy is sent to the billing department, where it is further processed. A third copy is sent to the warehouse. A final copy is sent to the customer as a receipt stating that the order has been received and processed.

The warehouse clerk uses the sale order as a stock release document to pick the requested items from the shelves. The clerk then manually prepares a bill of lading and packing slip, which accompany the goods to the carrier. The warehouse clerk then accesses the computer terminal and creates a digital shipping notice for the billing department. Finally, the clerk files the stock release hard copy in the warehouse.

The billing department clerk reconcile the hard copy sales order and the digital shipping notice, which is displayed on her terminal. She then prints two hard copies of an invoice. One copy is sent to the customer as a bill and the other is sent to the accounts receivable department. The clerk then files the sales order copy in the department.

Upon receipt of the hard-copy invoice, the accounts receivable clerk creates a digital record in the accounts receivable subsidiary ledger from his terminal. The clerk then files the invoice copy in the department.

Cash Receipts Procedures

Customer payments and remittance advices come into the mail room. A clerk separates the documents and sends the remittance advices to accounts receivable and the checks to the cash receipts department.

Upon receipt of the remittance advices, the accounts receivable clerk accesses the customer's account in the accounts receivable subsidiary ledger from a terminal and adjusts the balance accordingly. The clerk files the remittance advice in the department.

The cash receipts clerk receives the checks and posts them to the cash receipts journal from her terminal. The clerk then manually prepares a hard-copy deposit slip and sends it with the cash to the bank.

Finally, at the end of each day the system prepares a batch totals of all sales and cash receipts transactions and posts them automatically to the control accounts in the digital general ledger.

Required

1. Create a system flowchart of the existing system

2. Analyse the physical internal control weaknesses in the system

3. Describe the IT controls that should be in place in this system.