$10.$ Internal Control

The following is a description of a manufacturing company's purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database.

The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. He then chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to AP and receiving departments, giving the clerks of each department access to the purchase order from their respective terminals.

When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the original purchase order from his terminal and reconciles it with the packing slip. The clerk then creates a digital receiving report from a terminal in the receiving department. A digital notification is sent to the accounts payable and inventory control, giving the respective clerks access to the receiving report. The inventory control clerk then updates the inventory records.

When the AP clerk receives a hard$-$copy invoice from the vendor, she reconciles the invoice with the digital purchase order and receiving report, and she adds a record to the digital AP subsidiary ledger and records the liability amount in the purchase journal from the department terminal. The AP clerk periodically reviews the AP file for items due, and, when they are identified, prepares a check for the amount due. Finally, using the department terminal, the clerk removes the liability from the AP subsidiary file and posts the disbursement to the cash account.

Required

A$)$ Create a system flowchart of the system. $10.$ Internal Control

The following is a description of a manufacturing company's purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database.

The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. He then chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to AP and receiving departments, giving the clerks of each department access to the purchase order from their respective terminals.

When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the original purchase order from his terminal and reconciles it with the packing slip. The clerk then creates a digital receiving report from a terminal in the receiving department. A digital notification is sent to the accounts payable and inventory control, giving the respective clerks access to the receiving report. The inventory control clerk then updates the inventory records.

When the AP clerk receives a hard$-$copy invoice from the vendor, she reconciles the invoice with the digital purchase order and receiving report, and she adds a record to the digital AP subsidiary ledger and records the liability amount in the purchase journal from the department terminal. The AP clerk periodically reviews the AP file for items due, and, when they are identified, prepares a check for the amount due. Finally, using the department terminal, the clerk removes the liability from the AP subsidiary file and posts the disbursement to the cash account.

Required

A$)$ Create a system flowchart of the system.