Examine the flowchart for an order processing system shown on the following page.

Required:

a. In a review of internal controls, which of the procedures could you walk through to test for control weaknesses?

b. What documents would you walk through in the examination of a single transaction in the order processing cycle shown in the flowchart?

c. The flowchart reveals at least one control weakness that increases the possibility of a defalcation. Explain the nature of the control weaknesses that you find.

d. Correct the weaknesses and reconstruct the flowchart showing your corrections.

Transcribed Image Text:

SHIPPING DEPARTMENT Customer's order Prepare bill of lading Bill of lading ACCOUNTING DEPARTMENT CASHIER Prepare Enter in Sales Checks invoice sales journal journal Received Invoice To carrier To customer Order picker File Deposit checks in bank Post to Accts. Rec. Accts. Rec. subsidiary ledger Office storage