Refer to the system flowchart below and identify the internal control risks represented in it:
Refer to the system flowchart below and identify the internal control risks represented in it:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Refer to the system flowchart below and identify the internal control risks represented in it:

Transcribed Image Text:# Accounts Receivable Process Flowchart
This flowchart outlines the process for handling remittance advice and checks within the mail room and accounts receivable department of an organization.
### Mail Room Clerk 1:
1. **Open Mail and Reconcile Remit Advice and Check:**
- Process begins with receiving remittance advice and checks.
2. **Remit advice and Check Processing:**
- Checks and remittance advice are reconciled.
- Output includes separate remittance advice and checks forwarded for further processing.
### Mail Room Clerk 2:
1. **Prepare Remittance List, Distribute RA and Checks:**
- Remittance list is prepared.
- Distributes remittance advice (RA) and checks accordingly.
### Accounts Receivable Department:
1. **Reconcile, Record in Journal, and Accounts, Deposit Cash:**
- Receives check, remittance list, and advice.
- Reconciliation process is completed, and the cash is recorded in the journal and accounts.
2. **Financial Entries:**
- Updates are made to the AR Sub Ledger, Cash Receipts Journal, and AR Control GL Cash systems.
3. **Check Deposit:**
- A deposit slip is prepared.
- Check is sent to the bank for deposit.
### Key Components Illustrated:
- **Flow Elements:**
- The arrows indicate the direction of the workflow from one process to another.
- **Documents and Outputs:**
- Documents include remittance advice, checks, and remittance lists.
- Outputs consist of deposit slips and financial journal entries.
- **Storage and Ledger Updates:**
- Represents the integration with accounting records such as sub-ledgers and journals.
This structured approach ensures efficient processing and accurate financial record-keeping.
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