26201352 - shipping department receives a marked up sales...

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26201352 NADCo Revenue Case NADCo’s overall revenue cycle internal controls are effective. Cash receipts and Sales Order Entry had the highest effectiveness while accounts receivable and shipping had the weakest controls. Cash sales were effective however showed some weakness regarding checks and reconciliation. When accepting checks, cashiers do not ask for proper identification and the sales clerk does not reconcile receipts to the cash register tape. To correct this weakness, cashiers should ask for the customers drivers license when accepting checks. NADCo has a very effective credit policy. The Treasurer must approve all new customers and uses external credit agency. The one weakness is that the cashier, who works in cash receipts, also approves the bad debt write-offs, creating an ineffective control. NADCo should have a person uninvolved with cash receipts and sales approve bad debt write offs. Shipping internal controls are weak because there is no formal shipping report. The
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Unformatted text preview: shipping department receives a marked up sales order from the warehouse with the quantities picked recorded on the sales order. Quantities on the sales order are recounted and compared to the physical count however, the shipping clerk does not match goods received to the item descriptions, making the control less effective. The shipping department needs to have a formal shipping document and make sure the shipping clerk also matches item descriptions, not only quantities. Accounts Receivable has the weakest control. The A/R system does not match quantities to the shipping report nor per item price to the sales order. Accounts Receivable aging report is prepared but its unclear how often. To correct this weakness, NADCo should alter the A/R system, insuring that it will match quantities to the shipping report and per item price to the sales order....
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This note was uploaded on 12/12/2010 for the course ACCT 307 taught by Professor Murray during the Spring '10 term at Central Texas College.

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26201352 - shipping department receives a marked up sales...

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