GREEN PRODUCTS GARDEN SUPPLY (STAND-ALONE PC-BASED ACCOUNTING SYSTEM) Green Products Garden (GPG) Supply sells and distributes a wide range of garden products and equipment including organic fertilizers, premium flower and grass seeds, organic pesticides, and garden spreaders. GPG's headquarters and warehouse is located in Hopewell, Virginia. Their customers are primarily small garden centers and landscape companies in the Mid-Atlantic States. Sales are on credit. GPG's current information system includes manual procedures supported by independent (non- networked) PCs in each department. Communications between departments is entirely through hard-copy documents. Recently, GPG has been receiving complaints 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 GPG's procedures and internal controls. The following is a description of GPG's expenditure cycle. Purchasing Process The purchasing agent monitors the inventory levels by reviewing the inventory subsidiary ledger from his department computer. He decides which items need to be replenished and selects a supplier. He then enters this information into the computer terminal to create a digital purchase order and prints three hard copies of the purchase order. The purchasing agent sends one copy to the supplier; one copy to the accounts payable department, where it is filed temporarily, and files the third copy in the purchasing department. When the goods are received, the receiving department inspects and verifies them using the packing slip, which is attached to the goods. The receiving clerk manually prepares two hard copies of a receiving report. One copy accompanies the goods to the warehouse for storage. The receiving clerk sends the second copy to the purchasing agent, who uses it to update the inventory subsidiary ledger and to close the open purchase order. The purchase agent then files the receiving report in the department. Accounts Payable and Cash Disbursements Procedures The accounts payable clerk receives the supplier's invoice and reconciles it with the purchase order in the temporary file. From her computer terminal, the clerk records the purchase in the purchases journal and records the liability by adding a record to the AP subsidiary ledger. The clerk then updates the inventory control and accounts payable control accounts in the general ledger. The purchases order and invoice are then filed in the department. Each day, the clerk visually searches the AP subsidiary ledger from her terminal for invoices that are due to be paid. The clerk prepares the check and records it in the digital check register. The negotiable portion of the check is mailed to the vendor, and a check copy is filed. The clerk then closes the liability in the AP subsidiary ledger and updates the accounts payable control and cash accounts in the general ledger. Required: In tabular form, Identify the risks (what can go wrongs) and the related controls within the existing system.

1. The assertion/s violated and on what significant account must be associated for each risk identified.
2. Each control identified must be properly classified into its type (DET or PRE) and method (AUT, MAN, ITD) DET-Detective, PRE-Preventive, AUT-automated, MAN-Manual, ITD-IT dependent
3. Identify any design gaps, and associate them properly to each risk (what can go wrong) identified.

Design gap

Risk assertion

Control type and method