DURAPLASTCompany Ltd., opened its doors in 1979 as awholesale supplier of plumbing equipment, tools, andparts to hardware stores, home-improvement centers,and professional plumbers in the Accra-TemaMetropolitan area. Over the years they haveexpanded theiroperations to serve customers across thenation and now employ over 200 people as technicalrepresentatives, buyers, warehouse workers, and salesand office staff. Most recentlyDURAPLASThas experiencedfierce competition from the large online discount storessuch asQualiplastandInterplast. In addition,the company is sufferingfrom operational inefficienciesrelated to its archaic information system.DURAPLAST's revenue cycle procedures are described in thefollowing paragraphs.

Revenue Cycle

DURAPLAST's sales department consists of 17 full-time andpart-time employees. They receive orders via traditionalmail, e-mail, telephone, and the occasional walk-in.BecauseDURAPLASTis a wholesaler, the vast majority of itsbusiness is conducted on a credit basis. The processbegins in the sales department, where the sales clerkenters the customer's order into the centralized computersales order system. The computer and file serverare housed inDURAPLAST's small data processingdepartment.If the customer has done business withDURAPLASTin thepast his or her data are already on file. If the customer isa first-time buyer, however, the clerk creates a newrecord in the customer file. The system then creates arecord of the transaction in the open sales order file.When the order is entered, an electronic copy of it issent to the customer's e-mail address as confirmation.

A clerk in the warehouse department periodicallyreviews the open sales order file from a terminal andprints two copies of astock release document for eachnew sale, which he uses to pick the items sold from theshelves. The warehouse clerk sends one copy of thestock release to the sales department and the secondcopy, along with the goods, to the shipping department.

The warehouse clerk then updates the inventory subsidiaryfile to reflect the items and quantities shipped. Uponreceipt of the stock release document, the sales clerkaccesses the open sales order file from a terminal, closesthe sales order, and files the stock release document inthe salesdepartment. The sales order system automaticallyposts these transactions to the sales, inventorycontrol, and cost-of-goods sold accounts in the generalledger file.

Upon receipt of the goods and the stock release, theshipping department clerk prepares thegoods for shipmentto the customer. Theclerk prepares three copies ofthe bill of lading. Two of these go with the goods to thecarrier and the third, along with the stock release document,is filed in the shipping department.The billing departmentclerk reviews the closed salesorders from a terminal and prepares two copies of thesales invoice. One copy is mailed to the customer and theother is filed in the billing department. The clerk then createsa new record in the account receivable subsidiary file.The sales order system automatically updates the accountreceivable control account in the general ledger file.

DURAPLASThas hired you to reviewits sales order procedures for internal control complianceand to make recommendations for changes.

You are requiredto:

a. Design a data-flow diagram of the current system.(8marks);

b.Design asystem flowchart of the existing system.(8marks);

c.Analyze the internal control weaknesses in the system.(14marks);and

d.Design a system flowchart of a redesigned computer-based system that resolves the controlweaknesses that you identified. Explain your solution.(20marks)