Green Pond Nursery Supply (GNPS) is a garden center wholesaler in eastern Pennsylvania that sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and garden spreaders. GPNS's customers are primarily small garden centers and landscape companies in the Mid-Atlantic States. Sales are on credit. GPNS's current information system includes manual procedures supported by independent (nonnet worked) PCs in each department. Communications between departments is entirely through hard-copy plaints from customers and suppliers about billing, shipping, and payment errors. Management believes that these complaints stem, in part, from their antiquated computer system. You have been hired to assess GPNS's procedures and internal controls. The following is description of GPNS's revenue cycle. Sales Procedures The revenue cycle begins when a customer places an order with a sales representative by phone or fax. A sales department employee enters the customer order into a standard sales order format using a word processor installed on a PC to produce: three sales order copies, a stock release document, a shipping notice, and a packing slip. The accounting department receives a copy of the sales order, the warehouse receives the stock release and a copy of the sales order, and the shipping department receives a shipping notice and packing slip. The final sales order copy is sent to the inventory control department. Upon receipts of the sales order, the accounting department clerk manually prepares an invoice and sends it to the customer. Using data from the sales order, the clerk then enters the details of sale in the department PC and records the sale in the sales journal and in the AR subsidiary ledger. At the end of the day, the clerk prepares a hard copy of sales journal voucher, which is sent to the general ledger department. Upon receipt of the sales order and stock release, the warehouse clerk picks the products and sends them to the shipping department, along with the stock release. The warehouse clerk then updates the internal inventory stock records on the warehouse PC and files the sales order in the warehouse. The shipping department clerk receives a shipping notice and packing slip from the sales department. The clerk files the shipping notice and holds open the packing slip until he receives the stock release and products from the warehouse. Upon receipt of the stock release, the shipping clerk prepares the two copies of a bill of lading using a word processor. The bills of lading and the packing slip are sent with the product to the carrier. The clerk then files the stock release in the department. Upon receipt of the sales order copy, the inventory control clerk updates the inventory subsidiary ledger and files the sales order in the department. At the end of the day, the clerk prepares a hard copy inventory account summary and sends it to the general ledger department. The general Ledger clerk posts the journal voucher and inventory summary to the general ledger, which is stored on the department PC, and the clerk the files these documents in the general ledger department. Cash receipts procedure Mail room employees open cash receipts form customers and reconcile the amounts on the checks and remittance advices and send remittance advices to the accounting department, where a clerk records each remittance advice on a remittance list. The remittance list is then sent to the cash receipts department. Using the remittance advices, the accounting clerk updates the customer accounts receivable on the department PC and files the advice in the department. At the end of the day, the clerk prepares an AR summary on the PC and sends a hard copy of the summary to the general ledger department. The mail room clerk sends the checks to the cash receipts department, where a clerk endorses each check with the words "For Deposit Only". Next, the clerk reconciles the checks with the remittance list and records the cash receipts in the cash receipts journal on the department PC. Finally, the clerk prepares a deposit slip and sends it and the checks to the bank The general ledger clerk posts the accounts receivable summary to general ledger AR control and cash account and files it in the general ledger department.

Required: 1. Prepare the process map for both sales order processing and cash receipts procedures using chart. Use multiple pages as necessary. 2. In tabular form, Identify the risks (what can go wrongs) and the related controls within the existing system.

(a)The assertion/s violated and on what significant account must be associated for each risk identified.

(b)Each control identified must be properly classified into its type (DET or PRE) and method (AUT, MAN, ITD)

(c)Identify any design gaps, and associate them properly to each risk (what can go wrong) identified. 3. Order of presentation: (1)Sales order process map

(2)Sales order risk and control matrix

(3)Cash receipts process map

(4)Cash receipts risk and control matrix