The sales department encourages its customers to forward the orders in any form, including mail, e-mail or fax. The sales clerk first converts these sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Sales clerk thinsk that checking the accounting record is not technical and he can perform these duties efficiently. Two years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk did not differentiate the new customers from the existing customers and he is using the same procedure to check the creditworthiness of the new customers. The customer’s order is rejected if the customer’s credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised sales order in the sales order system through his computer terminal. A digital copy of the order is distributed to the warehouse and the shipping department terminals for further processing. The computer system automatically records the sale in the sales journal. The clerk files the hard copy of the customer order in the sales department without reviewing the entry. Then, the receipt of the digital sales order prompts on the computer terminal of the warehouse manager. This digital sales order has the associated stock release and the shipping notice. These documents play an important role in the transation processing system. The warehouse manager has access to these documents. For further processing, the warehouse manager prints out the sales order, the stock release, and the shipping notice. Using the stock release copy, a warehouse clerk picks the selected items from the shelves and sends them to the shipping department along with the stock release and the shipping notice. The warehouse manager then updates the inventory subsidiary ledger and the general ledger control account from his computer terminal. The shipping clerk receives the physical stock, the stock release, and the shipping notice from the warehouse manager. The shipping clerk matches them to the corresponding digital sales order displayed on his terminal. If everything matches, he prints out three hard copies of the bill of lading and a packing slip. The shipping clerk sends two copies of the bill of lading and the packing slip, along with the goods, to the carrier. The stock release copy and the shipping notice are sent to the accounts receivable department. The third bill of lading copy is filed in the shipping department. Account receivable clerk receives the stock release and shipping notice from the shipping clerk. Then, the accounts receivable clerk manually creates a hardcopy invoice, which is immediately mailed to the customer. After mailing the invoice, the clerk uses information on the stock release to update the accounts receivable subsidiary ledger and general ledger from his computer terminal. After the records are updated, the clerk files the stock release and shipping notice in the accounts receivable department. Sometimes, the account receivable clerk reconciles the quantities from the sales order and adjusts the account receivables. The payments of customers come directly to the general mailroom along with other mail items. The mail clerk performs the different tasks, including (1) sorting the mail, (2) opening the customer payment envelope, (3) removing the customer’s check and remittance advice, and (4) reconciling these two documents. To control the checks and remittance advices, the clerk manually prepares two hard copies of a remittance list. He sends one copy to the accounts receivable department, along with the corresponding remittance advices. The other copy of the remittance list accompanies the checks to the cash receipts department. Once the checks and remittance list arrive in the cash receipts department, the treasurer performs .The additional cost required to establish separate departments for warehousing, shipping and inventory control is considered a necessary cost for the added benefit of control over inventory.” Discuss this statement in the light of existing revenue cycle of RCE Limited. In the light of our discussion during Interactive Tutorials, describe potential internal control weaknesses in the sales order processing procedures and cash receipts procedures of RCE Limited. In the light of our discussion during Interactive Tutorials, discuss the potential risks associated with the internal control weaknesses identified in Section (2) above. Based on Section (3) above, what types are frauds are possible.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
The sales department encourages its customers to forward the orders in any form, including
mail, e-mail or fax. The sales clerk first converts these sales order into the standardised sales
order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Sales clerk thinsk that checking the accounting record is not technical and he can perform these duties efficiently. Two years
ago, the sales clerk requested the accounting department to provide him with a list of
customers whose account receivables are written off. The sales clerk is still using this
information to check the creditworthiness of the customers. The sales clerk did not
differentiate the new customers from the existing customers and he is using the same procedure to check the creditworthiness of the new customers. The customer’s order is
rejected if the customer’s credit is not verified.
The sales order processing is started after the credit verification. In particular, the sales clerk
records the approved standardised sales order in the sales order system through his computer
terminal. A digital copy of the order is distributed to the warehouse and the shipping
department terminals for further processing. The computer system automatically records the
sale in the sales journal. The clerk files the hard copy of the customer order in the sales
department without reviewing the entry. Then, the receipt of the digital sales order prompts
on the computer terminal of the warehouse manager. This digital sales order has the
associated stock release and the shipping notice. These documents play an important role in
the transation processing system. The warehouse manager has access to these documents. For
further processing, the warehouse manager prints out the sales order, the stock release, and
the shipping notice. Using the stock release copy, a warehouse clerk picks the selected items
from the shelves and sends them to the shipping department along with the stock release and
the shipping notice. The warehouse manager then updates the inventory subsidiary ledger
and the general ledger control account from his computer terminal.
The shipping clerk receives the physical stock, the stock release, and the shipping notice from
the warehouse manager. The shipping clerk matches them to the corresponding digital sales
order displayed on his terminal. If everything matches, he prints out three hard copies of the
bill of lading and a packing slip. The shipping clerk sends two copies of the bill of lading and
the packing slip, along with the goods, to the carrier. The stock release copy and the shipping
notice are sent to the accounts receivable department. The third bill of lading copy is filed in
the shipping department. Account receivable clerk receives the stock release and shipping
notice from the shipping clerk. Then, the accounts receivable clerk manually creates a hardcopy invoice, which is immediately mailed to the customer. After mailing the invoice, the
clerk uses information on the stock release to update the accounts receivable subsidiary ledger
and general ledger from his computer terminal. After the records are updated, the clerk files
the stock release and shipping notice in the accounts receivable department. Sometimes, the
account receivable clerk reconciles the quantities from the sales order and adjusts the account
receivables.
The payments of customers come directly to the general mailroom along with other mail
items. The mail clerk performs the different tasks, including (1) sorting the mail, (2) opening
the customer payment envelope, (3) removing the customer’s check and remittance advice,
and (4) reconciling these two documents. To control the checks and remittance advices, the
clerk manually prepares two hard copies of a remittance list. He sends one copy to the
accounts receivable department, along with the corresponding remittance advices. The other
copy of the remittance list accompanies the checks to the cash receipts department. Once the
checks and remittance list arrive in the cash receipts department, the treasurer performs .The additional cost required to establish separate departments for warehousing,
shipping and inventory control is considered a necessary cost for the added benefit of
control over inventory.” Discuss this statement in the light of existing revenue cycle of
RCE Limited.
In the light of our discussion during Interactive Tutorials, describe potential internal
control weaknesses in the sales order processing procedures and cash receipts
procedures of RCE Limited.
In the light of our discussion during Interactive Tutorials, discuss the potential risks
associated with the internal control weaknesses identified in Section (2) above.
Based on Section (3) above, what types are frauds are possible.
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