Ajax, Inc., an audit client, recently installed a new computer system to more efficiently process its shipping, billing, and accounts receivable records. During interim work, an assistant reviewed the accounting system and the internal controls. The assistant determined the following information concerning the new computer system and the processing and control of shipping notices and customer invoices. Each major computerized function (i.e., shipping, billing, accounts receivable, etc.) is permanently assigned to a specific computer operator, who is responsible for making program changes, running the program, and reconciling the computer log. Responsibility for the custody of and control over the magnetic tapes and system documentation is randomly rotated among the computer operators on a monthly basis to prevent one person from having access to the tapes and documentation at all times. Each computer programmer and computer operator has access to the computer room through a magnetic card and a digital code that is different for each card. The systems analyst and the supervisor of the computer operators do not have access to the computer room.

The computer system documentation consists of the following items: program listing, error listing, logs, and record layout. To increase efficiency, although batch totals are prepared, they are not reconciled.

Ajax ships its products directly from two warehouses that forward shipping notices to general accounting, where the billing clerk enters the price of the item and accounts for the numerical sequence of the shipping notices. The billing clerk also prepares daily adding-machine tapes of the units shipped and the sales amount. Shipping notices are forwarded to the computer department for processing. The computer output consists of (1) a three-copy invoice that is forwarded to the billing clerk and (2) a daily sales register showing the aggregate totals of units shipped and sales amounts that the computer operator compares to the adding machine tapes. The billing clerk mails two copies of each invoice to the customer and retains the third copy in an open invoice file that serves as a detail accounts receivable record.

Required

Make one specific recommendation to correct each condition in which internal control procedures are not considered adequate in the new computer system and are not efficient for processing and control.