Business processes and internal controls - Part B

[Same scenario as previous question]

Below is an extract of the revenue process within Calders Ltd.

Calders Ltd manafacturers and sells packaging products to businesses around Australia.

A customer calls sales office and asks for quote regarding a specific packaging item and price. A sales representative emails the customer regarding the quote. The customer agrees to the quote and sends Calders a purchase order. The sales representative checks the customer against customer table, and if the customer is not in the list, he sets up a new customer and grants a default customer credit of $5,000.

The sales representative prepares and approves a sales order matching with the quote and emails the customer the confirmation. Inventory control checks the available stock in the central warehouse and pick the items accordance with the sales order. If there is insufficient stock they will put through a back order request to the purchasing department and simultaneously inform the sales representative who then informs the customer of the expected timeframe for the back order. Sometimes a back order is made when the central warehouse is out of stock but stock is available in other stores.

The picked items are sent to Shipping which prepares a hand-written packing slip and send it with the items to the customer. Copies of the packing slips are batched and filed in Shipping and sent to Accounting the following Monday. Upon receiving the packing slip, Accounting compares it with the sales order and the quote and prepares and sends the invoice to the customer. All invoices are due two weeks after the invoice date.

At the end of the month, the computer prints out a Accounts Receivable Aging report for all receivables due that month. Accounts Receivable clerk then sends out a overdue reminder to customers with invoices that are more than 7 days overdue. Since the start of the Covid pandemic in 2020, Accounts Receivable clerks have been given the ability to extend the due date of certain invoices by two weeks to a month if they are satisfied that a customer is a struggling business due to the pandemic.

c. Recommend a control for each of the risks you explained. (10 marks)

Please use the following table in answering question b) to d)

	Risk	Explanation of the risk	Control for the risk	Classification of control
1
2
3
4
5