The following is a description of manufacturing companys purchasing procedures. All computers in the company are networked to a centralized accounting system so that each terminal has full access to a common database.

The inventory control clerk periodically checks inventory levels from a computer terminal to identify items that need to be ordered. Once the clerk feels inventory is too low, he chooses a supplier and creates a purchase order from the terminal by adding a record to the purchase order file. The clerk prints a hard copy of the purchase order and mails it to the vendor. An electronic notification is also sent to accounts payable and receiving, giving the clerks of each department access to the purchase order from their respective terminals.

When the raw materials arrive at the unloading dock, a receiving clerk prints a copy of the purchase order from his terminal and reconciles it to the packing slip. The clerk then creates a receiving report on a computer system. An electronic notification is sent to accounts payable and inventory control, giving the respective clerks access to the receiving report. The inventory control clerk then updates the inventory records.

When the accounts payable clerk receives a hardcopy invoice from the vendor, she reconciles the invoice with the digital purchase order and receiving report and prepares a paper cash disbursements voucher. The cash disbursements voucher and invoice are placed in the open accounts payable file in a filing cabinet untilthe due date. The clerk also updates the accounts pay- able subsidiary ledger and records the liability amount in the purchase journal from the department computer terminal. The accounts payable clerk periodically reviews the cash disbursement file for items due and, when they are identified, prepares a check for the amount due. Finally, using the department terminal, the clerk removes the liability from the accounts payable subsidiary file and posts the disbursement to the cash account.

Required

a. Create a system flowchart of the system.

b. Analyze the internal control weaknesses in the sys- tem. Model your response according to the six cate- gories of physical control activities specified in SAS 78/COSO.