INTERNAL CONTROL

Using the following flowchart for of a purchases system, identify SIX major control weaknesses in the system. Discuss each weakness.

Guide Questions and Notes

- The process starts at the purchases department, is this where the whole P2P process should begin?

- Check if the inventory ledger is updated using the appropriate accounting records

- Check if the receiving department prepares the receiving report properly

- Check if 3-way match is performed prior to posting invoices

- Check if the proper reconciliation is performed prior to signing the checks

- Check if GL has the necessary vouchers and documents in place prior to posting

P2P Process Flowchart for Company A PROBLEM 8: INTERNAL CONTROL Vendor Purchases Inventory Control Receiving Accounts Payable Cash Disbursents General Ledger Purchasing Goods Arrive Prepares Three from Vendor Copies of PO Purchase with Packing Slip Order Cash Packing Disbursement Prepar Invoice PO Slip Voucher Update Inventory tecords Purchase Ledger Order Prepare Post Receivin Sign Liability AP Ledger Check Checks sport Copy Purchase Purchase Order Order Receiving Cash Post to General Check GL Report Disbursement Ledger Voucher A Cash Invoice Disbursement Voucher Invoice Check Check Copy Copy Check A