Hodag Company has automated its receiving function as follows:
1. A receiving supervisor accesses an open purchase order file, listed by vendor, to determine whether a shipment should be accepted.
If the shipment is not on the open order list, the supervisor must obtain permission from a purchasing agent before the shipment can be accepted.
2. Most items are accepted, opened, and counted. The counts are entered on paper documents that are copies of the purchase order with the quantity ordered blocked out. The document is batched in the receiving office, and all items are input by a clerk.
3. An automated scanner reads selected items, but the boxes are not opened. The computerized scanning count is automatically recorded on the receiving document. If differences are noted between the scanning from the outside of the carton and the actual contents when opened, an adjusting document is prepared and sent to accounts payable and the purchasing agent.
4. A quality control department selectively tests goods before they are put into production. Any defective items are noted and a document is sent to accounts payable and the purchasing agent and the goods are marked for return. The goods are not returned to the vendor, however, unless specifically authorized by the purchasing agent.
5. The receiving document contains information on who should pay freight. If the shipment comes with freight due, the receiving department is authorized to make the payment. Where applicable, the receiving department prepares a chargeback notice for the freight and forwards it to the purchasing agent and accounts payable.

Required
a. What additional computerized control procedures would the auditor expect to be implemented in the system described?
b. What risks are present in the system as described? What additional controls, or improvements in controls, might be implemented to lessen the risks?
c. What audit procedures might the auditor use to ensure that goods are accepted and paid for only when the purchase is authorized and that the payments are for the correct quantity and correct price?