Ascendex Sdn Bhd is an online company that supplies a range of IT products. Its product line includes IT hardware and software. Their main customers are government agencies and private company. The company employs a combination of manual procedures and a networked accounting system with distributed terminals in several departments. After years of satisfactory performance, however, Ascendex Sdn Bhd is now experiencing operational inefficiencies and accounting errors. Your firm has been hired to evaluate Ascendex’s business processes and internal controls. Ascendex’s expenditure cycle is described in the following paragraphs. PURCHASE SYSTEM PROCEDURES Ascendex’s transactions are initiated when the purchasing department clerk reviews the inventory file for items that need to be replenished. The clerk selects a vendor, adds a record to the digital purchase order (PO) File, and prints four hard copies of the PO. One copy is filed in the department; the second copy is sent to the receiving department; the third copy is sent to the Accounts Payable (AP) department; and the final copy is sent to the vendor. When the goods and the packing slip arrive at the receiving department, the receiving clerk examines the items for condition and verifies the quantities received against the packing slip. Upon completion of the inspection, the clerk manually creates two hard copies of receiving report. One copy is filed in the department and the second accompanies the goods to the warehouse. In the warehouse, the clerk receives and shelves the goods. In addition, the clerk updates the inventory file by posting the amounts received to the various inventory records affected. When the AP department clerk receives the invoice from the supplier, he visually matches it to the hard-copy purchase order on file. The clerk then adds a record to the vendor invoice file, which serves as the AP subsidiary ledger and sets a due date for payment. Finally, at the end of each day, the warehouse clerk and the AP clerk create digital journal vouchers to reflect the day’s transactions. The system automatically posts the journal vouchers to the relevant general ledger control accounts. c) Analyse THREE (3) physical internal control weaknesses in the system. d) Describe FOUR (4) IT controls that should be in place in this system. e) Briefly explain the purchase requisition and blind copy of a purchase order, and their purposes
Ascendex Sdn Bhd is an online company that supplies a range of IT products. Its product line includes IT hardware and software. Their main customers are government agencies and private company. The company employs a combination of manual procedures and a networked accounting system with distributed terminals in several departments. After years of satisfactory performance, however, Ascendex Sdn Bhd is now experiencing operational inefficiencies and accounting errors. Your firm has been hired to evaluate Ascendex’s business processes and internal controls. Ascendex’s expenditure cycle is described in the following paragraphs.
PURCHASE SYSTEM PROCEDURES
Ascendex’s transactions are initiated when the purchasing department clerk reviews the inventory file for items that need to be replenished. The clerk selects a vendor, adds a record to the digital purchase order (PO) File, and prints four hard copies of the PO. One copy is filed in the department; the second copy is sent to the receiving department; the third copy is sent to the Accounts Payable (AP) department; and the final copy is sent to the vendor.
When the goods and the packing slip arrive at the receiving department, the receiving clerk examines the items for condition and verifies the quantities received against the packing slip. Upon completion of the inspection, the clerk manually creates two hard copies of receiving report. One copy is filed in the department and the second accompanies the goods to the warehouse.
In the warehouse, the clerk receives and shelves the goods. In addition, the clerk updates the inventory file by posting the amounts received to the various inventory records affected. When the AP department clerk receives the invoice from the supplier, he visually matches it to the hard-copy purchase order on file. The clerk then adds a record to the vendor invoice file, which serves as the AP subsidiary ledger and sets a due date for payment. Finally, at the end of each day, the warehouse clerk and the AP clerk create digital journal vouchers to reflect the day’s transactions. The system automatically posts the journal vouchers to the relevant general ledger control accounts.
c) Analyse THREE (3) physical internal control weaknesses in the system.
d) Describe FOUR (4) IT controls that should be in place in this system.
e) Briefly explain the purchase requisition and blind copy of a purchase order, and their
purposes
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
