Martin Stephens has asked you to develop a document flowchart for the cash receipts system at M and S Trading Pty Ltd. Martin's narrative of the system is as follows: Customer payments include cash received at the time of purchase and payments received in the mail. At day's end, the treasurer endorses all cheques and prepares a deposit slip for the cheques and the cash. A clerk deposits the cheques, cash and deposit slip at the local bank each day. When cheques are received as payment for accounts due, a remittance slip is included with the payment. Remittance slips are used to update the accounts receivable file at the end of the day. Remittance slips ae stored in a file drawer by date. Every week, a cash receipts report and an aged trial balance are generated using the accounts receivable ledger. The cash receipts report is sent to management. A copy of the aged trial balance is sent to the credit and collections department.

a. Identify and describe three (3) risks that are present in process. [5 marks]

b. Identify any three (3) controls that are present in process, explain their operation and the risks that they address. [6 marks]

c. Identify three (3) risks that do not have relevant control activities and discuss the internal control activity that would be appropriate to address the risk.