CASE C: Compulsive Accessories, Inc. (Billing Process)

Compulsive Accessories manufactures and sells speakers, headphones, and related items to retail stores. Completed orders (goods and attached sales order) are received in the shipping department from the factory floor. The shipping clerk keys the sales order number into the computer in the shipping department. The computer accesses the sales order on the sales order master data and displays the open sales order. After determining that the correct sales order has been displayed, the shipping clerk keys in the items and quantities being shipped. The clerk reviews the shipment data and, if correct, accepts the input. (Note: The remainder of the shipment process is beyond the scope of this case narrative.)

After the shipment data has been accepted, the computer updates the sales order master data to reflect the shipment, creates and records an invoice on the accounts receivable master data, and prints an invoice, in three parts, on the printer in the billing office. A billing clerk signs the invoice, mails copies 1 and 2 to the customer, and files copy 3 by customer name.

CASE D: Compulsive Accessories, Inc. (Cash Receipts Process)

Before starting this case, review the facts in Case C. Assume that customers have been billed and have sent in a payment with copy 3 of the invoice, on which they have filled in the amount remitted. The cash receipts clerk compares the check to the amount written on the invoice and, in a space reserved, enters the amount received so that it can be computer scanned.

Checks and these invoice copies are batched. The invoice copies are sent to the IT department. The deposit slip is prepared, in triplicate, and the checks are deposited. Copies of the batch totals and deposit slip copy 2 are filed separately by date. Copy 3 of the deposit slip is sent to the treasurer's office.

The IT department uses an optical scanner to process the invoice copies. This run occurs each evening at 10 p.m. Customers' accounts are posted, and a cash receipts listing is produced and sent to cash receipts each morning, where it is checked against and filed with the related batch totals. A copy of the cash receipts listing is sent to the treasurer's office.

P 11-2 For Cases C and D:

a. Draw a systems flowchart.

b. Prepare a control matrix, including explanations of how each recommended existing control plan helps to accomplishor would accomplish in the case of missing planseach related control goal. Your choice of recommended control plans could come from Exhibit 11.1 (pg. 431) and/or Exhibit 11.2 (pp. 437438) plus any other control plans from Chapter 9 or Chapter 10 that are germane to your company's process.

c. Annotate the flowchart prepared in part a to indicate the points where the control plans are being applied (codes P-1, , P-n) or the points where they could be applied but are not (codes M-1, , M-n).