Sparkle Design Ltd is a leading manufacturer of steel furniture which operates in Penang Industrial Zone. The management has generally been satisfied with the firm's operation to date. However, the present purchasing system has evolved through use rather than formal design. The company's present purchasing system may be described as follows:

The company allows managers in the various department to acquire supplies, equipment and other items needed. It begins with department manager requiring the item prepares a purchase requisition noting the description of each item to be purchased, the account number to be charged, and the signature of the manager.

Upon receipt of the purchase requisition, a purchasing department clerk inserts the name and number of a suitable supplier and the estimated price for the item. After all data has been entered into a computer, a purchase program generates three hard copies of the prenumbered purchase order. The purchasing manager signs the purchase order. One copy of the purchase order is forwarded to the supplier and another copy each to accounts payable and receiving.

When the ordered items arrived at the receiving dock, a receiving clerk pulls the purchase order from the file to check the quantity ordered and counts the goods. The clerk then prepares a receiving report, signs the report and sends it, together with the received items, to the requisitioning department.

Upon arrival of the items, manager in the requisitioning department signs the receiving report, and forwards it to accounts payable. After the supplier's invoice is received, the account payables clerk pulls the purchase order and receiving report from the file. The clerk approves the invoice for payment after any differences between the three documents (purchase order, receiving report and supplier's invoice) have been reconciled.

The account payable clerk then updates the inventory control and accounts payable control in the general ledger. The purchase order and invoice are then filed in the department. After reviewing the invoices that are due to be paid, the account payable clerk draws a check for the appropriate amount and records it in the check register. The check is mailed to the supplier together with a copy of the invoice. The clerk finally updates the account payable subsidiary ledger, the accounts payable control and cash accounts in the general ledger.

REQUIRED:

a.Discuss five (5) internal internal control weaknesses that exist in the purchasing system of Sparkle Design ltd and suggest the appropriate improvements. Use the following format:

Weakness

Improvements

(20marks)

b.Advanced technologies can significantly alter and simplify the process in the expenditure cycle. Briefly explain how advanced technology can simplify the purchase processing and cash disbursement process of Sparkle Design Ltd.