Question

Until recently, Amalgamated Gas employed a batch- processing system for recording the receipt of customer payments. The following narrative and Figure describe the procedures involved in this system.


The customer’s payment and the remittance advice (an optically scanned turnaround document) are received in the treasurer’s office. An accounts receivable clerk in the treasurer’s office enters the cash receipt onto the remittance advice and forwards the document to the EDP department. The cash receipt is added to a control tape listing and then filed for deposit later in the day. When the deposit slips are received from EDP later in the day ( approximately 2: 30 p. m. each day), the cash receipts are removed from the file and deposited with the original deposit slip. The second copy of the deposit slip and the control tape are compared for accuracy before the deposit is made and then filed together. In the EDP department, the remittance advices received from the treasurer’s office are held until 2: 00 p. m. daily. At that time, the customer payments are processed to update the records on magnetic tape and to prepare a deposit slip in triplicate. During the update process, data are read, nondestructively, from the master accounts receivable tape, processed, and then recorded on a new master tape. The original and second copy of the deposit slip are forwarded to the treasurer’s office. The old master tape ( former accounts receivable file), the remittance advices ( in customer- number order), and the third copy of the deposit slip are stored and filed in a secure place. The updated accounts receivable master tape is maintained in the system for processing the next day.
Amalgamated Gas has reviewed and redesigned its computer system so that it has online capabilities. The new cash receipts procedures, described below, are designed to take advantage of the new system. The customer’s payment and remittance advice are received in the treasurer’s office as before. A terminal is located in the treasurer’s office to enter the cash receipts. An operator keys in the customer’s number and payment from the remittance advices and checks. The cash receipt is entered into the system once the operator has confirmed that the proper account and amount are displayed on the screen. The payment is then processed online against the accounts receivable file maintained on magnetic disk. The cash receipts are filed for deposit later in the day. The remittance advices are filed in the order in which they are processed; these documents will be kept until the next working day and then destroyed. The computer prints out a deposit slip in duplicate
at 2: 00 p. m. for all cash receipts since the last deposit. The deposit slips are forwarded to the treasurer’s office. The cash receipts are removed from the file and deposited with the original deposit slip; the duplicate deposit slip is filed for further reference. At the close of business hours (5: 00 p. m.) each day, the EDP department prepares a record of the current day’s cash receipts activity on a magnetic tape. This tape is then stored in a secure place in the event of a systems malfunction; after 10 working days, the tape is released for further use.

Required
a. Prepare a systems flowchart of Amalgamated Gas’s new online cash receipt procedures.
b. Have the new cash receipt procedures as designed and implemented by Amalgamated Gas created any internal and systems control problems for the company? Explain youranswer.


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  • CreatedFebruary 26, 2015
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