QUESTION 1:

Sandy is an accountant with ABC, Inc. She is newly hired and her first assignment is to review the processes in the REVENUE cycle for internal control weaknesses. Sandy finds the following procedures in the Revenue Cycle at ABC.

1.Sales are made via telephone. Most sales are on credit-with ABC extending the credit.

2.Sales data are entered into the system by a sales clerk in the batch mode at the end of the day.

3.The sales clerk manually enters the price and quantity on an order sheet and totals it.

4.The clerk then sends a copy of the sales order to the shipping department.

5.Upon receipt of the sales order, the shipping department "pulls" the merchandise, assembles it on a pallet, and completes the bill of lading.

6.The merchandise is then loaded on a truck and sent on its way.

7.The shipping department enters "SHIPPED" on the sales order and sends it to the sales accounting department.

8.The sales accounting department invoices customers by manually entering the customer name, part-number, quantity, price, and total from the sales order.

9.A copy of the invoice is sent to the customer and another copy is sent to the credit department for account receivable balance update.

10.Payment is made directly to the A/R department who posts the payment and deposits the checks.

REQUIRED: IN TWO PAGES OR LESS, LIST THE INTERNAL CONTROL WEAKNESSES IN THE ABOVE SCENARIO AND LIST THE CONTROLS THAT SHOULD BE PRESENT. Identify any of your controls that are input edit controls. ORGANIZE YOUR ANSWER AS FOLLOWS:

NUMBERWEAKNESS(S)CONTROL(S)