12-25 (Objectives 12-1, 12-2) Anthony Liu, CPA, prepared the flowchart on the next page that portrays the raw materials purchasing function of one of Anthony's clients, Medium-Sized Manufacturing Company, from the preparation of initial documents through the vouching of invoices for payment in accounts payable. Assume that all documents are prenumbered.

Required

Identify the deficiencies in internal control that can be determined from the flowchart. Use the methodology discussed in this chapter. Include internal control deficiencies resulting from activities performed or not performed.

MEDIUM-SIZED MANUFACTURING COMPANY FLOWCHART OF RAW MATERIALS PURCHASING FUNCTION STORES Purchase requisition | Br requisition Purchase order 5 Purchase requisition Purchase order 5 Explanatory Notes A. Prepare purchase requisition (3 copies) as needed. B. Prepare purchase order (6 copies). C. Attach purchase requisition to purchase order. D. Merchandise received. counted. and receiving report (3 copies) prepared based on count and purchase order. E. Match purchase order, purchase requisition, receiving report, and invoice. F. Prepare voucher after comparing data on purchase order, invoice. receiving report. G. To cash disbursements in controller's division for payment. Req. = Purchase requisition P0. = Purchase order Inv. = Invoice MANUFACTURING DIVISION PURCHASE OFFICE RECEIVING ROOM CONTROLLER'S DIVISION Date Prepared by Approved by ACCOUNTS PAYABLE Purchase requisition 2 Purchase requisition | Br requisition Purchase order 3 Purchase 4 By purchase By order vendor requisition Purchase Purchase order 3 Purchase order 4 Pu rchase order Receiving report Receiving report I Purchase order 6 Fm\" Receiving vendor report | Voucher with documents Receiving Receiving report 2 a purchase order