You have recently been hired to evaluate the fixed assets system for Alawda Manufacturing Company. Use internal control activities and conceptual fixed asstets system as a reference to prepare a list of questions or appropriate procedures to evaluate Alawda’s internal control structure as it pertains to fixed assets processing for its factory.

You have recently been hired to evaluate the fixed assets system for Alawda Manufacturing Company. Use internal control activities and conceptual fixed asstets system as a reference to prepare a list of questions or appropriate procedures to evaluate Alawda’s internal control structure as it pertains to fixed assets processing for its factory

Introduction: ABC Corporation is a manufacturing company that produces and sells consumer electronics. To ensure the effectiveness and efficiency of its expenditure cycle processes, ABC Corporation has enlisted a group of students to conduct an internal control assessment. The students' task is to identify control weaknesses in the expenditure cycle and propose recommendations to address these vulnerabilities.  Scenario: ABC Corporation's expenditure cycle encompasses various stages, including requisitioning, purchasing, receiving, and accounts payable. The company utilizes an integrated enterprise resource planning (ERP) system to manage these processes.  Question 1: What control weaknesses can you identify in ABC Corporation's receiving and inspection process that may result in incorrect recording of received items, acceptance of damaged goods, or potential theft or misappropriation of inventory?

Internal Control Cases UTICA LIGHTING COMPANY (CENTRALIZED SYSTEM WITH DISTRIBUTED TERMINALS) Utica Lighting Company (ULC) is a manufacturer of outdoor lighting systems for patios, walkways, and public areas. It markets its product to landscaping companies and local municipalities. ULC employs a centralized computer system with distributed terminals in the various departments. Recently the company has been having manufacturing delays and cost overruns. ULC has hired your auditing firm to assess its operations and internal control procedures. ULCs conversion cycle is triggered by a report from the finished goods warehouse. The warehouse clerk periodically reviews the inventory records in a search for low-stock items. When the quantity on hand of an inventory item in the finished goods warehouse falls below its pre-established minimum, the warehouse clerk sends a digital inventory status report from the warehouse terminal to production planning and control advising them to schedule a production batch run for the item in question. Upon receipt of the report the production planning and control department clerk accesses the digital bill of materials and the routing sheet files for the items to be produced and adds the production details to the digital production schedule. The system automatically adds a record to the open work order file and sends a digital work order to the work center supervisors terminal and to the cost accounting clerks terminal. The work center supervisor accesses the work order from his terminal and prints hard-copy move tickets and material requisitions for each stage in the production process. Production employees take the materials requisitions to the storekeeper and secure the components, subassemblies, and raw materials needed to perform their production tasks. If excess materials beyond the standard amount are needed, the supervisor prepares additional materials requisitions. The employees also complete job time tickets after each stage in the process to reflect the time spent on the job. When the employees complete their tasks, they send the move tickets and time tickets to the cost accounting department. The storekeeper receives the materials requisitions and releases the materials into production. He then updates the raw material inventory records and sends the requisition to cost accounting. When inventories of component parts and raw materials fall to their reorder points, the storekeeper prepares purchase orders and sends them to the respective vendors. Vendors deliver raw material inventories directly to the storeroom, at which time the storeroom clerk inspects them and updates the digital raw materials subsidiary ledger. Each day the storekeeper prepares a journal voucher and posts to the general ledger raw material control account. The cost accounting clerk receives the digital work order and initiates a new WEP account for the batch. During the production process, the clerk receives hard-copy move tickets, materials requisitions, and job tickets from the work centers, which the clerk uses to update WIP account. When production is complete, the clerk closes the WIP account for the batch and transfers it to the finished good inventory subsidiary ledger. At the days end, the cost accounting clerk prepares a digital journal voucher reflecting the WIP status and any transfers from WIP to finished goods inventory. The clerk then posts the journal voucher to the WEP and FG general ledger control accounts. Required a. Prepare a data flow diagram of the current system. b. Prepare a system flowchart of the existing system. c. Describe the internal control weaknesses.