The internal auditor of a manufacturer is reviewing order-entry and shipping procedures. Figure represents the procedures in place.

Explanatory Notes A = Open Mail B = Prepare Invoice from Customer Order and Distribute C = Pick Goods to Extent Available and Forward to Shipping D = Prepare Bill of Lading and Label Cartons for Shipment E = Note Under shipments on Invoice # 3 after Goods are Shipped F = Complete Invoice Extensions Based on Actual Quantities Shipped G = Post to Ledger and Prepare Daily Sales Journal = Hand truck– Goods Movement

All documents used in the procedure are pre-numbered. There are many under shipments on customers’ orders, but goods not shipped are not automatically back- ordered.

Required

a. Identify deficiencies and/ or omissions in the control system for the order-entry and shipping functions.

b. Suggest improvements in the control system to remove the deficiencies you noted.

Use the following format in responding to this question:

a. Deficiency and/ or omission

b. Improvements suggested

Transcribed Image Text:

Mailroom Accounts Receivable Stores Shipping Order Invoice Daily Cust Nume ber ber Order H」 Bill of Lading Invoice Num- Eil of Lading Invoice Invoioe Truck Invoice Invoice Customer