Objective: The purpose of this assignment is to facilitate student to (i) prepare system documentation of a given narrative and (ii) to apply the internal controls concepts in a given scenario. In your recent assignment, you have approached Sihat Energi Sdn Bhd (SESB) to establish a better understanding of the business processes and the applications of internal control procedures in the business. Your team intended to document and assess applications of internal controls on its sales as well as purchasing activities. For that purpose, you and your team members managed to discuss with Hashim, SESB's general manager. He described the SESB operation as follows: SESB is a direct selling business that focuses on supplying health food and drinks products nationwide. The company has been operating in Jitra, Kedah since 2017. The company supplies the products to the company's resellers located in various districts of Kedah. The company currently employs 15 full-time employees to manage its business operation and administration. Meanwhile, the resellers comprise of an individual who has registered with the head office and agreed to order the minimum value of stocks every month. After three years in operation, SESB resellers currently stood at 300 individuals. The reseller places orders to the SESB's office on two to three weeks interval in which SESB will make necessary arrangement for delivery to the respective resellers. The reseller may also drop by to the head office for collecting the orders. Each reseller is granted 30-day credit terms with a varying credit limit, depending on their previous credit performance as well as the value of their monthly order. As a trading business, SESB secures the inventories for its business from selected manufacturers. The suppliers produce the products based on the company's specifications and brand name. Similarly, the company also granted 60 days credit term by the suppliers. For more detail description of the procedures, Hashim granted permission for your team to interview the respective person-in-charge of the business procedures. Sales Order To understand this procedure, your team first met with Azalina, the sales officer. She first explained the nature of SESB sales operation. The sales are made to the resellers that have registered with SESB. Each reseller receives a pre-numbered purchase order booklet from SESB office upon its registration. Periodically, the reseller completes the purchase order form for reordering purpose. The reseller specifies the description of the ordered products and the quantity, respectively. The purchase order form is faxed/e-mailed to SESB's head office for processing. The reseller may also bring the purchase order form directly to the head office for ordering purpose. Your team further asked about the process of handling the customer's order. The following description was provided by Azalina: As a sales officer, she is responsible to review and to approve the order made by a reseller. Upon receiving the pre-printed purchase order copy from the reseller, she then checks the reseller's account status by referring to the customer's weekly s file. The accounts unit prepares the customer account's summary report weekly for the sales officer reference. Based on the customer's account record, she approves the reseller's order and transfers the order details into the sales order form (prepared in duplicate carbon copies). She then forwards the original sales order copy to a store executive. Meanwhile, the second and third sales order copies is filed together with the pre-printed purchase order by the reseller's name. In case of the customer exceeds its credit limit, Azlina remarks the customer's order as 'on hold' and files the customer's purchase order copy into 'Waiting Customer's Order' file. She then notifies the customer to clear the pending payment before the order being processed. Your team then met Selamat, the warehouse executive who is responsible for managing inventory and delivery related tasks. As he mentioned, he has two operation employees to help him in his unit. As your team observed, the storeroom area is securely locked and only accessible by the authorised employees. You also noticed that the 2,000 square feet storage area is also equipped with the fire extinguishers and smoke detectors. When requested to elaborate further on his responsibilities, he described as follows: Upon receiving the reseller's sales order details, he first checks the inventory card for the current inventory balances. If all the ordered products are available, he then requests the operation employee to pick up the ordered goods from the warehouse shelves based on the verified sales order copy. He then instructs the operation employee to complete a duplicate copy of the delivery note by specifying the sales order details and the delivery agent. The employee also attaches the sales order copy to the packaging. The packed order is kept in the collection area while waiting for the delivery. Selamat's description of the existing delivery procedures are summarised as below: The appointed delivery agent comes to the head office two times a week to collect the packed goods and deliver to the respective reseller. The agent picks up the packed inventories from the operation employee and signs on the delivery note prepared earlier. While the delivery agent retains the second copy of the delivery notes, the operation employee provides the original copy of an annotated delivery note to Selamat for recording purpose. He is responsible to update the respective inventory cards based on the number of units delivered. He then signs the completed delivery note and forwards it to the accounting officer. Purchase Order The following purchase procedures were obtained from Selamat, a warehouse executive. Periodically, he reviews the inventory cards and lists all products for reordering purpose. He decided on the purchases based upon the minimum inventory needed for each product together with the minimum order quantity specified by the vendors to determine the ordered quantity. Selamat then refers to the 'Suppliers' file' for identifying the vendor to deliver the ordered inventories. He then manually prepares a pre-numbered purchase order (three copies). He notifies the respective vendors on the purchase order details via e-mail/fax. The purchase order forms are then filed in 'Incoming Purchase Order' file by date while waiting for the delivery. The vendor fulfils the order and delivers the ordered inventories to SESB's receiving dock. Your team was then invited to observe the handling of vendors' delivery in the receiving dock area. The receiving dock is an open platform located beside the warehouse entrance in which the lorry drivers will unload the inventories. The operation employees handle the receiving process. When the delivery arrives, the employee takes out the respective purchase order copies from the 'Incoming Purchase Order' file. Next, the employee inspects the inventories received for possible damage, verifies that the inventory description and the stated quantity on the vendor's delivery note are consistent with the information in the purchase order. In several instances, a considerably high number of deliveries made by the vendors in a day causing the operation employee struggles to handle the incoming deliveries. As you observed during the visit, in several deliveries, the operation employee seems to simply verify the quantity received as per delivery note without physically inspecting and counting the number of inventories arrived. The operation employees further mentioned that in case of no discrepancies found on the order received, the operation employee signs the designated section for receiving information in the purchase order form and specifies the receiving date in the purchase order copy. The employee then keeps the purchase order copies together REQUIRED: Question (a) refers to (i) Sales Order and (ii) Cash Receipt procedures Using suitable software, prepare the following documentation for of SESB Sdn Bhd: a) a table of entities and activities, b) a context diagram, c) a logical data flow diagram, and d) a flowchart