Mr. Spiffy started an internet business selling a cleaning fluid that will kill viruses and bacteria while still being friendly to the environment upon washing and disposal. Spiffy found a manufacturer in Ohio that makes the product and will ship it to him for labeling and sending to customers. After a number of months, Spiffy had enough success to rent a warehouse facility with an office. His team set up the following for processing:

1. Spiffy uses an ordering system in the Cloud that will take customer orders online and payment by credit cards. That system downloads a digital file with details of the orders. The ordering system sends credit card payment information to a credit card processing company selected by Spiffy. All sales are prepaid.

2. The credit card payments are processed by the credit card processing company (called a Gateway company). The Gateway collects the funds from the customer credit card and sends the money to Spiffys bank account daily. Spiffy gets an email with the details of daily collections.

3. Spiffy buys goods weekly based upon his estimate of sales for the following week. The manufacturer ships the ordered goods to Spiffys warehouse. A shipping clerk fills the order from the ordering system, printing shipping labels from the ordering system. When the goods are shipped, the billing clerk enters the order number, and the ordering system produces totals and details of shipped goods.

4. Spiffy has a separate accounting system (also in the Cloud) which can upload the digital file of orders shipped to produce a sales journal.

5. Spiffys bookkeeper operates the accounting system. The bookkeeper compares the credit card payments from the Gateway to the orders shown shipped in the ordering system. The bookkeeper also looks to see that the deposits from the Gateway all make it into the bank account by reviewing deposits reported by Spiffys bank.

6. Spiffys bookkeeper will handle customers who claim they never got their order, trying to find out what happened and, when necessary, issue credits to the customers credit card by way of the Gateway.

ASSIGNMENT: You are part of the audit team auditing Spiffys financial statements. Prepare a Flowchart of the above procedures used by Spiffys company. Can you identify possible weaknesses in internal control? You may use an Excel sheet, or Word, other program or even hand draw and make a copy.