Gaurav Mirchandaniis is the warehouse manager for a large office supply wholesaler. Mr. Mirchandaniis re- ceives two copies of the customer sales order from the sales department. He picks the goods from the shelves and sends them and one copy of the sales order to the shipping department. He then files the second copy in a temporary file. At the end of the day, Mr. Mirchandaniis retrieves the sales orders from the temporary file and updates the inventory subsidiary ledger from a terminal in his office. At that time he identifies items that have fallen to low levels, selects a supplier, and prepares three copies of a purchase order. One copy is sent to the sup- plier, one goes to the AP clerk, and one is filed in the warehouse. When the goods arrive from the supplier, Mr. Mirchandaniis reviews the attached packing slip, counts and inspects the goods, places them on the shelves, and updates the inventory ledger to reflect the receipt. He then prepares a receiving report and sends it to the AP department.
Required:
Prepare a systems flowchart of the procedures just
described.
Identify any control problems in the system.
What kinds of frauds are possible in this system?
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