SmilesRUs is a wholesaler of supplies for dental clinics and dentists. They use an ERP system to maintain inventory on a real-time basis in the ERP database. The ERP is used for all of the companys business processes. Inventory records include an ROP and EOQ. Many products also have a preferred vendor. In order to be added to the database as a preferred vendor, the buyers and approved by the Purchasing Manager. When the vendor is approved by the Purchasing Manager, the info is routed to a clerk who is authorized to add vendors the ERP database.

During the day, the supplies clerk receives an online report listing the items that have reached their reorder point. The clerk reviews the report and determines whether the item is to be re-stocked (if the decision to discontinue carrying a product is made, no action is taken on the item). If it is to be re-stocked the clerk enters the information into a purchase requisition form in the ERP where it is assigned a sequential transaction number. The ERP records the purchase requisition in the Purchase Requisition data and updates the inventory master data to reflect that a request for re-order has been made for the EOQ quantity. If the Purchase is over $3000 the clerk routes the purchase requisition to the Inventory Manager who checks a box to approve the order. Inventory Manager has access to view all open requisitions online through the ERP. When the purchase requisitions are complete, they are routed to the Purchasing Department.

During the day the buyers in the Purchasing Dept receive the purchase requisitions. They select a vendor and enter PO Data. After the PO is saved, the purchase requisition and inventory master data are updated to indicate that the purchase order has been created. The completed prenumbered PO is printed in the Purchasing department and mailed to the vendor.

The receiving department inspects and counts the goods when they are received, compares the count to the packing slip, pulls up the PO in the ERP and enters the quantity received. The PO and inventory master data are updated to reflect the increase in the inventory on hand.

When the Accounts Payable department receives a vendor invoice, a clerk enters the PO number from the invoice into the ERP and the computer displays the PO. The clerk keys in the invoice data. The computer matches the price, quantity, and description of goods ordered and received with the price, description and quantity on the invoice. If the invoice price differs by more than 5% the invoice is routed to the Purchasing Manager for approval. Once validated (by the computer match or by the Purchasing Manager approval) the computer records the invoice (into accounts payable) and updates the PO and General Ledger master data.

Every morning Accounts Payable clerks review open invoices in the accounts payable master data and selects those that are due to be paid. The computer prints a check in the Accounts Payable department and the clerk mails the check to the vendor.

Due: a Flowchart of the Process and a completed Control Matrix and recommendations to remedy control weaknesses.