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Assignment - St James Memo - Leighton Nelson 0700225...

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Leighton Nelson 0700225 Memorandum To: Betty Watergate, St. James Clothiers From: Leighton Nelson Date: November 4, 2011 Subject: Procedures for the current year’s audit. Some aspects of the current manual sales accounting system have created risks that increase the nature of material misstatements in financial statements. In any event, the proposed IT-based sales systems are designed to minimize the risks of the existing manual process. The table below depicts the manual risks along with the impact on the financial statements as well as solutions for these risks. Risks of Manual System How Risks Impact Financial Statements New IT System Features that Mitigate Manual System Risks Cashiers have to manually record sales clerks name, product number, quantity of the item sold and sale prices. Misstatements of input could negative affect sales An inventory system, a master file for price listings, a log to track clerks’ activities and also a password for all clerks.
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