Identify FOUR (4) deficiencies of sales and collection system in GoodStar Co. Explain potential misstatement that could occur from each of these deficiencies.
You are currently performing an audit at GoodStar Co. The company manufactures tinned fruits which are supplied to large food retailers. Management team and those charged with governance of GoodStar have concerns about the effectiveness of their sales and collection system and asked you to review the system. Sales and Collection System Sales orders are mainly placed through GoodStar website and customers are also allowed to made orders through telephone. Online orders are automatically checked against the inventory records for availability, while orders received through telephone are checked manually by order clerks after the call. A follow-up call is usually made to customers if there is insufficient inventory. When taking telephone orders, clerks note down the details on paper and afterwards they complete a three-part pre-printed order form. These order forms are sequentially numbered and are sent manually to both delivery and the accounts department. As the company is expanding, customers can place online orders which will exceed their agreed credit limit by 10%. Online orders are automatically forwarded to the delivery and accounts department. A daily pick list is printed by the delivery department, and this is used by the warehouse team to deliver goods. The goods are accompanied by a delivery note and all customers are required to sign a copy of note. On return, the signed delivery notes are given to the warehouse team to file. The sales quantities are entered from the delivery notes and the authorized sales prices are generated by the invoicing system. If a discount has been given, this must be manually entered by the salesclerk onto the invoice. Due to the expansion of the company, and as there is a large number of sale invoices, extra accounts staff have been asked to help out temporarily with producing the sales invoices. Normally it is only two salesclerks who produce the sales invoices.
Identify FOUR (4) deficiencies of sales and collection system in GoodStar Co. Explain potential misstatement that could occur from each of these deficiencies.
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