IBALE, Charissa Joyce D.S.

November 25, 2019

ACA

POSAVEK REMODELING AND BUILDING SUPPLY COMPANY

Requirements:
b. System Flowchart
(Continued)
c. Weaknesses
1. The company does not perform Credit Check.
2. The billing department is also the one who records accounts receivable. This is prone to
fraud because there is no segregation of duties. Moreover, accountants will not be able to
verify the integrity of account balances on the company’s general ledger accounts,
especially between sales and accounts receivables.
3. There is also a problem in the segregation of duties with warehouse clerk. The clerk is
responsible for asset custody, he should not also update the inventory records.
4. Customers should be billed only when there is a shipping notice. However, they are billed
before the goods are shipped to them in the current system.
5. Sales are recorded before they are actually shipped because the sales clerk closes the
open sales order.
6. There is inaccuracy of entered items or quantities to be shipped because the shipping
clerk does not reconcile the stock release with the original order.

d. Redesigned Flowchart
Explanation:
Before processing the sales order, the company now needs to establish the credit
worthiness of the customer through a Credit Check. After the checking, data will go to a log called
credit records while the customer order file will go to a log of the same name. In the billing
department, it will focus only on shipment where they will directly receive Stock Release and Bill
of Lading files for review. They are no longer associated with recording Accounts Receivable. The
warehouse clerk’s printed hard copy will directly go to Sales Order System. The system is now to
one to update inventory records. The sales clerk will no longer need to close the open sales order
so the goods are recorded when they are actually shipped. Lastly, sales order will have to shipped
first before the customers are billed.