35 clerks who receive and sort the general mail. Included in the mail are envelopes containing cus- tomer checks and remittance advices, which the clerks open to verify that the checks are signed and are constant in amount with the remittance advice. The checks and remittance advices are orga- nized into batches and sent to the AR department where the AR clerk reviews them for correctness, posts to the AR sub ledger. The clerk then prepares two copies of a remittance list. One of these is filed in the department along with the remittance advice and the other is sent to the cash receipts department with the checks. Upon receipt of the checks and remittance list, the cash receipts clerk reconciles the documents and post the checks to the cash receipts journal. At the end of the day, the clerk prepares a deposit slip and sends it' along with the checks to the bank. Finally, the clerk summarizes the batch of cash receipts transaction and posts to the general ledger AR control account and the cash account. 4. SYSTEM DOCUMENTATION, RISK ANALYSIS, AND INTERNAL CONTROLS The following describes the cash receipts process for a company: The mail room staff consists of

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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35 clerks who receive and sort the general mail.
Included in the mail are envelopes containing cus-
tomer checks and remittance advices, which the
clerks open to verify that the checks are signed
and are constant in amount with the remittance
advice. The checks and remittance advices are orga-
nized into batches and sent to the AR department
where the AR clerk reviews them for correctness,
posts to the AR sub ledger. The clerk then prepares
two copies of a remittance list. One of these is filed
in the department along with the remittance advice
and the other is sent to the cash receipts department
with the checks.
4. SYSTEM DOCUMENTATION, RISK
ANALYSIS, AND INTERNAL
CONTROLS
Upon receipt of the checks and remittance list, the
cash receipts clerk reconciles the documents and post
the checks to the cash receipts journal. At the end of
the day, the clerk prepares a deposit slip and sends it
along with the checks to the bank, Finally, the clerk
summarizes the batch of cash receipts transaction
and posts to the general ledger AR control account
and the cash account.
The following describes the cash receipts process
Tor a company: The mail room staff consists of
Transcribed Image Text:35 clerks who receive and sort the general mail. Included in the mail are envelopes containing cus- tomer checks and remittance advices, which the clerks open to verify that the checks are signed and are constant in amount with the remittance advice. The checks and remittance advices are orga- nized into batches and sent to the AR department where the AR clerk reviews them for correctness, posts to the AR sub ledger. The clerk then prepares two copies of a remittance list. One of these is filed in the department along with the remittance advice and the other is sent to the cash receipts department with the checks. 4. SYSTEM DOCUMENTATION, RISK ANALYSIS, AND INTERNAL CONTROLS Upon receipt of the checks and remittance list, the cash receipts clerk reconciles the documents and post the checks to the cash receipts journal. At the end of the day, the clerk prepares a deposit slip and sends it along with the checks to the bank, Finally, the clerk summarizes the batch of cash receipts transaction and posts to the general ledger AR control account and the cash account. The following describes the cash receipts process Tor a company: The mail room staff consists of
Required
a. Prepare a flowchart of the cash receipts proce-
dures described previously.
b. Describe the risks, if any that are inherent in the
current system configuration.
6.
c. Describe the controls, if any, that are needed to
E
reduce or eliminate the risks identified in (b).
a.
Transcribed Image Text:Required a. Prepare a flowchart of the cash receipts proce- dures described previously. b. Describe the risks, if any that are inherent in the current system configuration. 6. c. Describe the controls, if any, that are needed to E reduce or eliminate the risks identified in (b). a.
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