Part 1

Using the system flowchart in Problem 8 is a payroll processing system, the time sheets serves as physical
source documents are collected in a batch, and information is entered into the system or output device.
Following that, the data is stored as the payroll data in a disk or direct access storage data (DASD). With
the use of a computer process, an editing program is utilized to verify the employee number and other
necessary information by checking it to the employee master file in the DASD as well as the cost
associated with the employee against the cost center master file.

In any circumstances where there are errors found, the records are sent to an error file. For example,
excessive numbers of hours recorded, understatement of the cost and the like should be examined.
Subsequently, the errors should be verified and accurate corrections should be made and be entered into
the system. In essence, the records that will be stored will be classified as edited transactions inside the
DASD. Then, these edited transaction records are sent to the next system program to process any relevant
updates in relation to the employee and cost center master files.

The correct and edited transactions are processed through the report program once all necessary
adjustments have been completed. Lastly, the report program will be in charge of generating hard copy
paychecks with regard to the payroll and labor of the employee and other reports necessary for the record-
keeping and for the organization itself. .

Part 2

The systems flowcharts have four distinct areas of activity which are the sales department, credit
department, warehouse, and shipping department. In this case, an auditor seeks to examine the internal
controls and procedures through this flowchart showing the sales order system. A clerk in the sales
department receives from a customer an order. He inputs information into a computer terminal that is
linked to a centralized computer program in the computer operations department whereas in the sales
department is where the original customer order is filed.

A computer program edits the transactions and credit checks of the customer by referencing a credit
history file that is stored separately. Then, produces a transaction file of sales orders. These sales order
transaction file is then processed by an update program that posts the transactions to their corresponding
records in accounts receivable (AR) and inventory files. Afterward, the update program produces three
(3) hard copies of the sales order where in the sales order copy 1 is sent to the warehouse, while copies 2
and 3 are sent to the shipping department.

In the warehouse, after the sales order copy 1 is received, the order fulfillment in the physical aspect will
be carried out by manually picking up the goods. The warehouse clerk checks and updates the digital
stock records on the warehouse personal computer (PC). Upon validating, the clerk sends the physical
inventory and sales order copy 1 to the shipping department.

The shipping department received sales order copy 1 and the goods from the warehouse. The clerk
reconciles goods based on copies 1, 2, and 3 and assigns copy 1 as a packing slip. Then, the product will
be shipped out. The clerk records the shipment and updates for tracking purposes in a hard-copy shipping
log and it also files two copies (sales order 2 and 3) of the sales order. Finally, the order received by the
customer, the destination.