Please note that there is no additional information needed, that all about the question.

Question

Atomy Ltd is a company which specialises in the supply of computer equipment and training, its customers tend to be small and medium-sized businesses. Ms. Josephine is the audit senior of Atomy Ltd and is examining the purchases system. Ms. Josephine has made the following system notes:

Atomy Ltd has three main income streams; retail of computer equipment, a computer repair centre and systems training. Each income stream is managed by a department manager.

The main features of the purchasing cycle are as follows;

• Each department manager orders goods and services for their own departments. Orders are frequently made by telephone or email with often only an email confirmation providing evidence of an order being raised.
• Department managers are trusted to order goods and services as they think appropriate, irrespective of the price of the order.
• When goods and services are received they are approved by the manager who has ordered the goods/services.
• Suppliers invoices are sent directly to the department managers who approve them for payment and pass them to the accounts department to be paid.
• A senior clerk in the accounts department enters the invoices in the purchase day book and updates the trade payables ledger.
• Purchase invoices are typically paid 30 days after receipt.

The accounts department are currently understaffed and as a consequence, the trade payables ledger has not been reconciled to the trade payables balance in the nominal ledger for a number of months. In addition, supplier statements are typically ignored.

Requireds:

Write a Management Letter with the format below in identifying the weaknesses in Atomy Ltds purchases system. For each weakness identified, note the potential implication and make a recommendation to overcome that weakness.

Format: (Hints: Identifying 7 points)

No.	Weaknesses	Possible implication	Recommendation
1.
2.
3.
4.
5.
6.
7.