OUTDOOR ADVENTURE: WHITE WATER AND CAMPING SUPPLIES

(NETWORKED COMPUTER SYSTEM AND MANUAL PROCEDURES)

Outdoor Adventure is a Montana-based wholesaler of rafting and camping equipment that serves outdoor sports camping retailers throughout the north-west. You have been hired by Outdoor Adventure to evaluate its processes, risks, and internal controls. The following paragraphs describe Outdoor Adventure's expenditure cycle procedures.

Purchases System

The process begins when the purchasing clerk check she inventory subsidiary ledger on his computer terminal each morning. When an item is deemed to be too low, the clerk selects a vendor from the valid vendor file and prepares a digital purchase order. The clerk prints two hard copies: one copy is sent to the vendor, and the other is filed in the department. Digital purchase order record is added to the PO File. When the goods arrive in the receiving department, the receiving clerk inspects them and reconciles the items against the information in the digital PO and the packing slip. The clerk then manually prepares two hard copies of the receiving report. One of these accompanies the goods to the inventory warehouse, where the clerk shelves the goods and updates the inventory subsidiary ledger from his terminal. The clerk then files the receiving report in the department. The other copy of the receiving report is sent to the AP department, where the AP clerk files it until the supplier's invoice arrives, When the AP clerk receives the invoice, he pulls the receiving report from the temporary file, prints a hard copy of the digital PO, and reconciles the three documents. At this time, the clerk updates the digital AP subsidiary ledger, the AP control account, and the inventory control account in the GL from his terminal. The clerk then sends the invoice, receiving report, and the purchase order copy to the cash disbursements department.

Cash Disbursements System

Upon receipt of the documents from the AP department. the cash disbursements clerk files the documents until their payment due date. On the due date, the clerk prepares a check for the invoiced amount, which is sent to the treasurer who signs it and mails the check to the vendor. The cash disbursement clerk then updates the check register, AP subsidiary ledger, and the AP control account from his terminal. Finally, the clerk files the invoice, purchase order copy, receiving report, and check copy in the department. Required: Prepare the process map for both purchasing and cash disbursement procedures using chart. Use multiple pages as necessary.