72. The following is a description of purchasing and accounts payable procedures in effect at the Northwest Manufacturing Company:Using departments submit purchase requisitions on prenumbered requisition forms. Each requisition is approved by the using department head, who also indicates the accounting distribution on the requisition form. Two copies are forwarded to the purchasing department, and one copy is filed numerically. Purchasing accounts for the numerical sequence of requisition forms on receipt. Prenumbered purchase orders are prepared, approved, and distributed: one copy each to the requesting, receiving, and accounts payable departments. Two copies of the purchase order are sent to the vendor, and one copy is filed numerically with the requisition form attached to it. A copy of the requisition is also forwarded to accounts payable. In the receiving department, counters inspect shipments and record their counts on tally sheets. The counters do not have access to purchase orders. The tally sheets are forwarded to the head of the receiving department. She compares the tally sheets with the purchase orders and prepares a prenumbered receiving report. This report indicates the actual quantity received. Items that are returned to the vendor are indicated on the receiving report, and separate prenumbered debit memos are prepared. The department head accounts for the numerical sequence of receiving reports and debit memos. Goods are transferred to the stores department. Copies of receiving reports and debit memos are sent to the requesting, accounts payable, purchasing, and stores departments. Each of these departments files its copy numerically. Invoices are routed from the mailroom to the accounts payable department. Clerks compare invoice details with those shown on the purchase order, requisition form, and receiving report and check for mathematical errors. The clerks also account for the numerical sequence of purchase orders and receiving reports. The clerks withhold invoices until all the preceding documents are received and the matching process is complete. On completion, the clerks assemble the invoice, purchase order, receiving report, and any related debit memos into a voucher package, initial the package, and forward the package to the accounts payable supervisor. The supervisor reviews the package, initials it to indicate approval for payment, indicates the date payment should be made, and forwards the package to the cash disbursements clerk, who then forwards it to data processing. After processing for input, the voucher packages are returned to the accounts payable department. Checks prepared by data processing are returned to accounts payable, attached to the corresponding voucher package, and submitted to the accounts payable supervisor for a final review before submission to the controller for signature. The controller reviews each voucher package and manually signs the checks. The checks and voucher packages are then sent to the treasurer, who also manually signs the checks. Two signatures are required on all checks. The treasurer’s secretary cancels all supporting documents and returns the canceled documents and the checks to the accounts payable supervisor. The voucher packages are filed by a clerk, who also prepares a data processing input sheet showing payee, check number, amount, and so on. The input sheets are processed to produce the cash disbursements records. The accounts payable supervisor forwards the signed checks to the mailroom. Freight invoices, which are substantial in total amount, are routed from the mailroom to a clerk, who checks their mathematical accuracy. The freight invoices are then forwarded to the accounts payable supervisor for approval. The supervisor indicates the date payment should be made and then forwards the invoices for check preparation by data processing. At month’s end, the cash disbursements book is totaled, and a journal entry is prepared by the cash disbursements clerk. It is approved by the accounts payable supervisor and given to the general ledger clerk for posting. The general ledger clerk is independent of all accounts payable and disbursement functions. Monthly bank statements are sent directly to the accounts payable supervisor, who performs the reconciliation.required REQUIREMENTS a. Design a flowchart of the present system.b. IN A THREE PAGE PAPER analyze the potential internal control weaknesses found in the case study (exclude the data processing department’s operation in your analysis. Your analysis should include specific modifications to the present procedures and recommendations should be supported with scholarly research).
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