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peach bloom cologne organization soluation

 peach bloom cologne company soluation Essay

Assignment #3

Accounts Receivable and Credit rating Sales

Part A--Optional Exercises

1 . Credit rating Sales Program Flowchart

Peach Blossom Cologne Company

Credit rating Sales program Flowchart

January 31, 2009

2 . Examination of Inner Control Advantages

CSF‑1

Peach Blossom Perfume Company

Credit Sales System

Internal Control Strengths

Durability

Segregation of Functions

1 . Segregation amongst sales, shops, shipping, and accounts receivable.

Authorization

2 . Credit revenue are permitted before shipment.

3. Revenue orders are approved.

4. Credit memos are accepted.

Input Handles

5. Invoices are prenumbered and manipulated.

6. Shipping documents happen to be prenumbered.

six. Credit memos are prenumbered and managed.

Processing Handles

8. Accounts are older periodically.

being unfaithful. A record of accounts previously crafted off is maintained.

twelve. Customer subsidiary ledgers are reconciled with the control consideration.

Possible Test of Control

Observe; find a credit rating sales transaction through the program (walk-through).

Take a look at credit manager's initials on sales bill listing.

Analyze sales manager's initials in sales invoice listing.

Analyze initials on credit memos.

Account for numerical sequence.

Account for numerical series.

Account for statistical sequence.

Examine aging of accounts.

Take a look at list of accounts. Determine success of girl collection procedures and search for recording of collection in to records.

Take a look at computer made balancing record.

3. Evaluation of Inside Control Weaknesses

CWF-1

Peach Blossom Perfume Company

Credit rating Sales System

Internal Control Weaknesses

Weak spot

Segregation of Functions

1 . Credit director reports to sales director.

2 . Accounts receivable attendant reports to credit manager.

3. Accounts receivable attendant has use of customer checks and cash prelist.

5. Sales are billed simply by bookkeeper, whom records journal entries

Potential

Error

Credit limits not controlled, giving rise to uncollectible accounts.

Credit rating manager may well direct accounts receivable attendant to write off accounts and misappropriate funds or retain cash remitted on accounts previously drafted off.

Accounts receivable clerk may credit rating customer's bank account, debit a free account other than Cash, and keep money.

Bookkeeper may possibly omit documenting sales and misapproppriate remittances by educating customers to forward remittances to him.

Compensating

Substantive

Procedure

Look at credit authorizations on test of accounts; review aging; review allowance account.

Cautiously review write-offs, all questioned accounts, and sample of accounts recently written away.

Without knowledge of accounts receivable clerk, conduct surprise cash count: for beginning of day, manage cash and prepare set of cash. At end of day, identify whether cash posted to fix accounts and deposited undamaged.

Match recording of sales with entries in accounts receivable subsidiary ledger.

Access to Assets

5. Accounts receivable documents are available to cashier.

Processing Controls

6. Bad debt write-offs not given the green light by treasurer.

7. Sales bills are not examined for prices and physical accuracy.

Terme conseille; accounts written off as bad debts.

Misappropriated cash.

Incorrect billings.

Perform surprise money account. Confirm accounts receivable. analyze most accounts written off.

Properly analyze most account write-offs.

Examine sample of revenue invoices; confirm accounts receivable.

4. Credit rating Sales Taxation Programs

Alternative A--Tests of Controls

SP‑1

Peach Bloom Cologne Organization

Credit Revenue

System System

1 . Trace a purchase...

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