The following describes the warehouse and shipping procedures for a company:
The warehouse clerk receives two copies of a stock release document from the sales department. The stock release document describes the items that were sold, the quantities to be picked from the shelves, and the warehouse locations of the items. The clerk then picks the items and sends them with one copy of the stock release document to the shipping department. Using the second copy of the stock release, the clerk accesses the inventory subsidiary ledger from the PC in the warehouse and updates the inventory to reflect the items shipped. The clerk also looks for Items that have fallen below their reorder points, selects a vendor, prepares a purchase order, and sends it to the vendor.
Upon receipt of the goods and a copy of the stock release document the shipping clerk prepares the items for shipment, records the shipment in the hard copy shipping log, and sends the items sold along with the stock release document to the carrier.
Required:
a. Prepare a systems flowchart of the procedures described.
b. Identify any control problems in the system.
c. What sorts of fraud are possible in this system?