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Question 4 Megah Electronic & Electrical Sdn Bhd is a manufacturer of electrical equipment. It has factories in Klang and Pasir Gudang and its customer

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Question 4 Megah Electronic & Electrical Sdn Bhd is a manufacturer of electrical equipment. It has factories in Klang and Pasir Gudang and its customer base includes retailers as well as Individuals. For retails customers, order is made manually through sales teams and all sales are in credit. As for individual customers, sales are made through their website. MEEB'S website allows individuals to order goods directly, and full payment is taken in advance. The website is integrated into the Inventory system and inventory levels are checked at the time when orders are placed The company's year-end is 31 December 2020. You are an audit supervisor of Rod & Co. and are currently reviewing documentation of MEESB's internal control in preparation for the year-end audit Goods are despatched via local couriers, however, they do not always record customer signatures as proof that the customer has received the goods. Over the past 18 months there have been customer complaints about the delay between sales orders and receipt of goods for retail customers. The company has investigated these and found that, in each case, the sales order had been entered into the sales system correctly but was not forwarded to the despatch department for fulfilling. MEEB's retail customers undergo credit check prior to being accepted and credit limits are set accordingly by accountant. These customers place their orders through sales team, who are allowed to decide on sales discount levels. If there is any sales returns the damaged goods are presented to sales team who issued pre-numbered credit memo and receiving report to the customers. Sales Leger Clerk, Irene is assigned to record sales, account receivable transactions and sales retums. Account officer. Prem is responsible to record cash receipt from retail customers. He is also responsible to prepare bank reconciliation on monthly basis and reviewed by Aisyah an account executive. Aisyah reconciles the sales ledger control account at the end of December in order to verify the year-end balance. She also responsible to prepare account receivable aging report in order to monitor overdue accounts. Monthly statements will be sent to the retail customers based on the aging report prepared, Required (a) List and explain FIVE (5) weaknesses in Megah Electronic & Electric San Bhd's sales and collection system that could lead to misstatement in the financial statements. (10 marks) (b) Give recommendations on how to improve each of the weaknesses identified in (a). (10 marks) [Total: 20 Marks]

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