Question

After a shipment is prepared, the shipping department pre-pares a shipping order form in three copies. The first copy is included with the goods sent to the customer as a packing slip. The second copy is forwarded to the billing department. The third copy is sent to the accountant. When the billing department receives the second copy of the shipping order, it uses the information thereon to prepare a two- part sales invoice. The second copy of the shipping order is then filed in the billing department. The first copy of the sales invoice is sent to the customer. The second copy of the sales invoice is forwarded to the accountant. Periodically, the accountant matches the copy of the shipping order with the copy of the sales invoice and files them alphabetically by customer name. Before doing so, however, the accountant uses the copy of the sales invoice to post the sales entry in the subsidiary accounts receivable ledger.

Required
a. For use in appraising internal control, prepare a flowchart covering the flow of documents reflected in the preceding situation.
b. List those deficiencies and/ or omissions revealed by the flowchart that lead you to question the internal control.



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  • CreatedFebruary 26, 2015
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