In reviewing the processes, procedures, and internal controls of one of your audit clients, Veronica

Corporation, you notice the following practices in place. Veronica has recently installed a new electronic

data processing (EDP) system that affects the accounts receivable, billing, and shipping records. The

company identified a computer operator who is permanently assigned to each of the functions of

accounts receivable, billing, and shipping. Each of these computer operators is given the responsibility

of running the program for transaction processing, making program changes, and reconciling the

computer log. To prevent an operator from having exclusive access to the tapes and documentation,

the computer operators randomly rotate the custody and control tasks every two (2) weeks over the

magnetic tapes and the system documentation. Access controls to the computer room consist of

magnetic cards and a digital code for each operator. Moreover, the system analyst and the computer

operation supervisor are not allowed to access the computer room.

The documentation for the EDP system consists of the following: record layouts, program listings, logs,

and error listings. Once goods are shipped from one of Veronica's three (3) warehouses, warehouse

personnel forward shipping notices to the accounting department. The billing clerk receives the shipping

notice and accounts for the manual sequence of the shipping notices. Any missing notices are

investigated. The billing clerk also manually enters the price of the item and prepares daily totals, which

are supported by adding machine tapes of the units shipped and the amount of sales. The shipping

notices and adding machine tapes are sent to the computer department for data entry.

The computer output generated consists of a two-copy invoice and remittance advice, and a daily sales

register. The invoices and remittance advice are forwarded to the billing clerk, who mails one copy of

the invoice and remittance advice to the customer and files the other copy in an open invoice file, which

serves as an accounts receivable document. The daily sales register contains the total of units shipped

and sales amounts. The computer operator compares the computer-generated totals to the adding

machine tapes.

Question: Are all the controls implemented by Veronica Corporation adequate? If not, cite at least two

(2) control weaknesses that are present. Discuss your answer in no more than five (5) sentences.