During your examination of the financial statements of the Gary Manufacturing Company for the year ended December 31, 19X0, you find that at January 1, 19X0, the company has installed the following punched-card processing system for recording raw material purchases:

1. Vendors' invoices are sent directly to the accounts payable department by the mail department.

2. All supporting documents to the invoices are accumulated in the accounts payable department and attached to the invoices. After being checked and cash discounts computed, the invoices are accumulated in batches and adding machine tapes prepared of the net invoice amounts to provide predetermined totals. Then the batches of invoices and tapes are sent to the tabulating department.

3. In the tabulating department, keypunch operators prepare for each invoice an accounts payable punched card and one or more punched cards for the related debit distribution to several departmental inventories.

4. The invoice register is prepared by tab runs of the distribution cards and accounts payable cards. In this run, totals of distribution cards are compared by the tabulating machine with the amounts punched for the related accounts payable cards. Tab run subtotals by invoice batches are taken for checking to the predetermined totals.

5. The general ledger control account is posted monthly from the totals shown in the invoice register and all other journals.

6. By sorting, the distribution and accounts payable cards are separated. The distribution cards are filed for further processing. The accounts payable cards are sorted by due dates and tab runs prepared to determine cash requirements.

7. On the due dates, the accounts payable cards are processed to prepare combined check and remittance statements.

8. At the end of the month the accounts payable cards in the unpaid file are tabuiated for comparison with the general ledger control account.

Required:

a. Prepare a flowchart of the system.

b. List the audit procedures you would use to test the system.