Cases 59 Holloway Enterprises is a manufacturer of model files contain not only the materials requisition forms airplanes that sell under the name Holloway Air received from Bryan, but also sales forecasts received Toys in toy stores and hobby shops throughout the from the sales department. These files are monitored United States and Europe. The company employs on a daily basis; if there is a match between the needs 160 people in its home office and sole manufacture identified by both stores and sales, a bill of materials ing and storage facility, which are both located in and a routing slip are prepared and forwarded to the Holloway, Indiana. production room. If inventory quantities for support- The inventory storeroom is called the stores ing materials are sufficient, a production schedule is department, and it is managed by Bryan Lewis. Both prepared and forwarded to the production room. If materials and finished goods are maintained in this materials are needed to support production of the area, as well as the supporting inventory records. items, a purchase requisition is prepared and for- Bryan performs a daily review of the items on hand by warded to the purchasing and stores department. monitoring the inventory subsidiary ledger and deter- Kate Betton is also the supervisor of the produc- mining whether additional materials are needed. If tion room. Once new documents are obtained from they are, Bryan prepares a materials requisition form the production planning department, the bill of to submit to the production planning department. materials and routing slip are sent to stores, where The production planning department is led by Bryan retrieves the necessary materials. He makes a Kate Betton. Upon receipt of a materials requisi copy of the bill of materials and routing slips and then tion form from Bryan, Kate files the form. Kate's returns these documents to the production room,along with the requested materials. At the end of the day, Bryan updates the inventory subsidiary ledger and prepares a journal voucher summarizing the day's use of materials. In the production room, the leaders of each pro- duction line collect employee time cards at the end of each week and send them to the payroll and cost accounting departments. They also prepare weekly job cost reports for the cost accounting department, itemizing the various costs that have been incurred. Todd Mcphee heads the cost accounting depart- ment. He uses the job cost reports and time cards to create journal vouchers that update the work-in- process and finished goods inventory accounts. As new cost data is obtained, the cost accountants are continually accumulating actual cost data to be com- pared with standard costs. Variances are calculated and compared, and the information is used to evalu- ate the line workers in the production room, as well as the managers and supervisors of each department. Deborah Jin is responsible for updating the gen- eral ledger on a weekly basis. The information from the journal vouchers is entered in the general ledger program, which automatically updates the respective accounts. All journal vouchers are filed in Deborah's office. Required: a. Draw a process map of the conversion processes at Holloway Enterprises. b. Draw a document flowchart showing the records used in the conversion processes at Holloway Enterprises. c. List any strengths and weaknesses in the com- pany's internal control procedures. For each weakness, suggest an improvement. d. Describe any benefits that Holloway Enterprises may receive by installing newer IT systems within its conversion processes. Be specific as to how IT systems could benefit each of the processes described, or how they could eliminate any weakness identified per item c
