Question

The following procedures relate to the sales- order system of the Tallahassee Sailboat Manufacturing Company. All sales orders are received in the sales department. Customers deal directly with salespeople who write up specifications for custom- manufactured sailboats. Once an order is complete, it is sent to the production supervisor, who makes three additional copies of the sales order on the company’s copying machine. The supervisor then numbers all four copies. Copy 1 is retained in an open file. Copy 2 is sent to the accountant. Copy 3 is returned to sales and is filed according to customer name. Copy 4 is attached to a job cost sheet for reference. The accountant, on receiving her copy of the sales order, immediately checks the numerical sequence written in by the supervisor to ensure that it conforms to the company’s scheme of pre-numbering. for Sarbanes– Oxley compliance, as part of going public. The job cost sheet is used to collect labor, material, and overhead costs. Materials are obtained from the stores supervisor, who reviews the specifications on the job cost sheet and estimates the materials required. He then pulls the appropriate materials and personally delivers them to the appropriate workers. He likes to do this personally because he feels that it minimizes errors and ensures that the workers do not enter the storeroom. The company bills are based on the stage- of- completion method. When the supervisor feels that a job is half complete, he notifies the accountant, who then bills the customer for 50% of the agreed- upon price. When the job is complete, the same procedure is followed. The president’s secretary opens the mail and separates checks and their accompanying invoices. The checks are rubber- stamped for deposit only. They are immediately forwarded to the cashier, who deposits them first thing the following workday. A copy of the deposit receipt is then forwarded to the accountant as a remittance advice. The invoices are sent to the accountant, who enters the amount received in the special journal for accounts receivable. Once a month, she posts the journal entries to the accounts receiv-able subsidiary ledger and cash account. After posting to the control accounts, she makes up financial statements. These procedures are comprehensive and receipts.

Required
a. Prepare an analytic flowchart relating to the procedures discussed above.
b. Using a two- column approach, list internal control weak-nesses and make suggestions for improvements.



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  • CreatedFebruary 26, 2015
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