1Evaluate the internal control system

Evaluate the internal control system and make recommendations in the following manner:

Weakness: The technicians can enter the computer system without supervision.

Consequences: Technicians may alter the system for misappropriation purposes.

Recommendation: Every activity must be authorised and a log book must be maintained for every activity by the technicians

North Point Ltd manufactures and sells compact discs.The raw material used for the discs is purchased from Compact Disk Pty Ltd.The company has a computerised system but it is not net-worked and each department has its own stand-alone computer system.An order for the purchase material is raised by the stores department by completing two copies purchase requisition (PR). The top copy of PR is sent to purchasing department.When Goods Received Report (GRR) is received by the stores department, the PR is reconciled with the second copy and it is sent to the accounts department after updating the inventory records.

Purchasing Department approves the purchase requisition and prepares three copies of purchase order (PO).The top copy of PO is sent to the supplier, second copy to the Accounts Payable and third copy to Receiving Department.

Receiving Department reconciles the goods received with the PO and prepares two copies of GRR.The top copy is forwarded to stores department, second copy to the Accounts Payable.

Accounts Payable Department reconciles and checks for accuracy of the PR, PO, GRR and supplier's invoice and forwards them to the group accountant with a cheque requisition form attached for the payment to the suppliers after updating the accounts payable records to indicate that the accounts have been settled.

The Group Accountant authorises the payments.Most payments are made electronically, but some suppliers are paid by cheque.The cheques are mailed to the suppliers by the Group Accountant assistant.

As the raw material is needed, the Production Manager raises Material Requisition (MR) and forwards it to the Stores Department.MR is filed by the Store Department after updating the inventory records.

Sales Department approves and prepares four copies of Sales Order (SO) upon receiving a customer's order in writing or by phone call.The top of the SO is sent to the customer, the second copy to the store and the fourth copy to the Dispatch Department.

Credit Manager in Accounts Receivable Department checks the SO and approves for the credit and returns to the Sales Department where it is filed with Customer Order.

Stores Department issues the goods accompanied with the SO to the Dispatch upon receiving the SO and updates the inventories records.

The officer in Dispatch Department forwards the SO to the Accounts Receivable department by marking it to indicate that the goods have been dispatched.

Accounts Receivable Department prepares three copies invoice upon receiving the SO from Sales Department and Dispatch.The top copy is sent to the customer.The Accounts Receivable officer records the detail of invoice into the Sales Journal and posts the subsidiary ledger and forwards the Sales Journal with the second copy of invoice to the Group Accountant who posts the transactions into the control account.The third copy invoice is filed by the Accounts Receivable Department.

Two officers in the Mail Room are responsible to open the mail and forward the cheques received from the customers with a mail list to the Accounts Receivable Department which passes on the cheques to the Cashier for banking.

The Accounts Receivable officer prepares the Cash Receipts Journal and updates the subsidiary ledger and forwards the Cash Receipts Journal to the Accounts Department where the control accounts are updated.