In the warehouse, the inventory is drawn as shown on copy 4 of the invoice with quantities adjusted as necessary. The warehouse copy invoice is filed in date order as recorded on the invoice. The Dispatch department receives the order from the warehouse identified by the customer's name, and quantities and product descriptions are checked to invoice copies. Where ordered quantities are more than the available stock, Dispatch Department staff alter both of their copies to agree with the quantity being supplied. Then the goods are prepared for shipment and a two-copy delivery docket is prepared. Copy 3 of the invoice is placed in one carton as a packing slip. Copy 5 of the invoice is returned to the Accounts Receivable Department together with the original of the delivery docket. A copy of these documents are numerically filed by the Dispatch Department staff. When copy 5 is received by the Accounts Receivable clerk, he records the invoice number, actual quantities dispatched, prices, extensions, discounts, if any, and total on copies 1 and 2. Copy 1 is forwarded to the customer together with the original of the delivery docket. The accounts receivable ledger and the sales journal are prepared simultaneously. To minimize errors, sales are posted to the accounts receivable ledger and sales journal using copy 2 of the invoice which is subsequently attached to copy 5 and filed numerically. Each month, the general ledger clerk summarizes the sales journal for posting to the general ledger. Because Excellent Furniture has a liquidity problem, the deposit of receipts is also expedited. The receptionist hands all mail receipts and related correspondence to AR who examines the cheques and determines whether or not the accompanying vouchers or correspondence contain enough detail to permit posting of the accounts. The AR then endorses the cheques and gives them to the cashier who prepares the daily deposits. No cash is received in the mail and no goods are sold over the counter. The AR uses the vouchers or correspondence that accompanied the cheques to post the accounts receivable ledger cards. A cash receipt register is prepared as a carbon copy of postings. Monthly, the general ledger clerk summarizes the cash receipts register for posting to the general ledger accounts. The AR also corresponds with customers about unauthorized deductions for discounts, allowances, returns, etc, and prepares the appropriate credit notes. Disputes involving large amounts are handed over to the sales manager for settlement. Each month, AR prepares a trail balance of the accounts receivable to agree with the general ledger.

Copy 1: customers' copy (held by AR until notice of dispatch is received).

Copy 2: Accounts Receivable Department copy Copies 3 & 5: Dispatch Department copies Required: Use the following table to: Prepare a management letter to Excellent Furniture detailing your review and evaluation of its internal control (IC) over customer billings and remittances. You need to identify 4 (Four) weaknesses, the potential consequences (effects) of those weaknesses, how these weaknesses could be corrected (strengthened), and at least ONE substantive audit procedure for testing the significance of the potential error.