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At the beginning of each day, the purchasing clerk checks the inventory subsidiary ledger on personal computer terminal. When the quantity of an item is

At the beginning of each day, the purchasing clerk checks the inventory subsidiary ledger on personal computer terminal. When the quantity of an item is considered as too low, the clerk selects a supplier from the valid suppler file and prepare digital purchase order. Two hard copies of the order are printed: One copy is sent to the supplier and the other is filed in the purchasing department. The digital purchase order record is added to the purchase order file.

The receiving clerk inspects the goods arrived at the receiving department and reconciles the items against the information in the digital purchase order and the packing slip. The clerk then prepares two hard copies of the receiving report manually. One copy of the report is sent to the accounts payable department. The other copy of receiving report accompanies the goods to the warehouse where the warehouse clerk shelves the goods, updates the inventory subsidiary ledger from the warehouse terminal and files the report in the department.

The accounts payable clerk files the receiving report upon receipt. When the supplier's invoice arrives, the clerk pulls the report from the file, print a hard copy of digital purchase order, and reconciles the three documents. After the check, the accounts payable clerk updates the accounts payable subsidiary ledger, the accounts payable control account and the inventory control account. The clerk then sends the invoice, receiving report and a copy of the purchase order to the cash disbursement department.

Discuss the internal control weaknesses in this purchases system and the associated risks.

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