In preparing to conduct the audit of the O'Farrell Corp, a manufacturer of fine Irish apparel, you have prepared the following narrative description of the process internal controls over financial reporting related to the materials acquisition process. The narrative is based on conversations with various department heads and the responses to a questionnaire passed out to the operating personnel.

The foreman of the production line completes a requisition for raw materials and forwards it to the purchasing business process. Purchasing uses the request to determine who is the best vendor for the materials from among their approved vendors carried on a master file. A prenumbered purchase order is then prepared in triplicate with one copy sent to the vendor, the second copy sent to receiving personnel in inventory management, and the third copy filed along with the requisition.

When the materials are received by inventory management, they are reconciled to the purchase order, a receiving report is completed in four parts (including date of arrival) and, if the goods are approved, they are sent to the factory floor. The first copy of the receiving report goes to payables personnel, the second copy goes along with the goods to the factory floor, the third copy is filed in receiving, and the fourth copy is sent to accounting in the financial management process for updating the general ledger.

Once the goods arrive at the factory floor, a receiving clerk is required to reconcile the goods received to the receiving report. From there, the goods are placed in service or are stored in a locked warehouse that adjoins the shop floor.

Personnel in payables file its copy of incoming receiving reports under the vendor number while they await the invoice. When the invoice arrives from the vendor, payables personnel reconcile the invoice to the receiving report and approves the invoice for payment. They then review the terms of the invoice to determine whether they may take advantage of any purchase discounts. If so, the invoice is marked for payment at the next weekly check run. If not, it is filed by date for payment no later than the due date (but not much earlier). Upon payment, a voucher is created and sent to accounting.

Accounting personnel reconcile the voucher to the original receiving report and update the appropriate ledger accounts on a batch basis once each week. Control totals and hash totals are kept.

a. Prepare a flowchart that depicts the materials acquisition process for \(\mathrm{O}^{\prime}\) Farrell Corp.

b. List the process controls evident in this process and state which financial reporting control objective the control is designed to achieve.

c. List the most important process control weaknesses and strengths of the materials acquisition process for \(\mathrm{O}^{\prime}\) Farrell Corp.