Julie is the new General Manager for 'Shoes Limited' a distributor of medium quality men's and women's shoes. Julie has identified several problems in the business, and she has asked you to see how these can be fixed. Julie has noted that stock is not balancing with the amount recorded as 'Sales'. The problems include the following current situations: 

(i) Orders are placed over the phone and collected direct from the warehouse. 

(ii) Invoices are sent after the orders have been collected and rely on the warehouse notifying the office that this has happened. 

(iii) There are no computerised or pre-numbered order dockets so recording of the orders rely on the honesty of the warehouse workers. 

(iv) Customers may pay cash at the time of collection which is then given to the Accounts Receivable clerk and banked by her at the end of the week. 

(v) Accounts Receivable are not being followed up within the month following the Sale. Some of these remain unpaid for 3 months after the collection of the items. The above situation has resulted in Julie not being able to authorise the Accounts payable clerk to pay for supplies and this has resulted in some suppliers withdrawing their credit terms to the business. 

 

A) Outline the internal control failures in the business giving a clear explanation of what the issue is and its effects on the business. 250 words 

B) Explain the process of how each of the above problems can be rectified. 250 words