Page 243 - Accounting Information Systems

214 PART II Transaction Cycles and Business Processes

Green Mountain blends and distributes coffee to a variety journal voucher is printed from the PC and sent to Vic,
of customers, including cafes, delis, and restaurants, and the general ledger clerk.
currently has about 6,700 customer accounts reaching Sara in the warehouse uses the stock release and file
states across the nation. As the company has grown, sev- copies to pick the goods from the shelf. She files the file
eral beverages have been added to their product line, copy in the warehouse. Guided by the information on
including signature blends, light and heavy roasts, decaf- the stock release copy, she then updates the digital in-
feinated coffee and teas, and herbal teas. Green Mountain ventory subsidiary ledger from the warehouse PC. Next,
Coffee Roasters, Inc., has been publicly traded since 1993. she sends the stock release copy, along with the goods,
Green Mountain Coffee has a warehouse and manu- to the shipping department. At the end of the day, Sara
facturing plant located in Wilton, Vermont, where it prepares a journal voucher from the PC and sends it to
presently employees 250 full-time and part-time work- the general ledger clerk.
ers. The company receives its beans in bulk from a The shipping clerk reconciles the stock release copy
select group of distributors located across the world, with the packing slip from sales. The clerk then manually
with their largest supplier being Columbia Beans Co. prepares a hard-copy bill of lading and records the ship-
Green Mountain Coffee also sells accessories that com- ment into the hard-copy shipping log. The bill of lading,
plement their products, including mugs, thermoses, and packing slip, and goods are sent to the carrier and the
coffee containers that they purchase from their supplier, stock release copy is filed in the shipping department.
Coffee Lovers, Inc. In addition, Green Mountain pur- In the accounting department, relevant information
chases paper products such as coffee bags, coffee cups, taken from the ledger copy (sent from billing) is entered
and stirrers, which they distribute to their customers. into the computer to update the accounts receivable
Green Mountain’s accounting system consists of records. A summary (end of day) is sent to Vic. The ledger
manual procedures supported by stand-alone PCs copy is then filed in the accounting department. Vic recon-
located in various departments. Because these com- ciles the accounts receivable summary with the journal
puters are not networked they cannot share data digi- vouchers and then updates the digital general ledger from
tally, and all interdepartmental communication is the department PC. All documents are then filed.
through hard-copy documents. Cash Receipts System
Green Mountain is a new audit client for your CPA
The mail room clerk receives the checks and remittance
firm and as manager on the assignment you are examin-
advices from the customer. He reconciles the checks
ing their internal controls. The revenue cycle is
with the remittance advices and prepares two copies of
described in the following paragraphs.
a remittance list. The checks and a remittance list are
Sales Order System then sent to John, in the accounts receivable department.
John uses a PC to process the cash receipts, update the
The sales process begins when a customer sends a cus-
cash receipts journal, and prepare a journal voucher and
tomer order to the sales clerk who does a credit check by
three deposit slips. The journal voucher is sent to Vic,
manually reviewing the hard-copy customer sales history
the general ledger clerk. The checks and two deposit
records. From the approved customer order, the sales
slips are sent to the bank to be deposited into Green
clerk then manually prepares several hard copies of a
Mountain Coffee’s account. The third deposit slip and
sales order. These include a customer copy, a stock
the remittance list are filed. The second remittance list
release, two file copies, a packing slip, an invoice, and a
and the remittance advices are sent to Mary, another
ledger copy. The invoice, ledger copy, and a file copy are
accounts receivable clerk who, using the same PC,
sent to the billing department. The second file copy and
updates the accounts receivable subsidiary ledger and
the stock release are sent to Sara in the warehouse. The
prepares an account summary, which is sent to Vic. The
packing slip is sent to the shipping department. The clerk
remittance list and the remittance advice are then filed.
files the approved customer order in the department.
Vic uses the journal voucher and the account summary
The billing department clerk reviews the source docu-
to update the general ledger. These two documents are
ments that she received from sales and adds prices to the
then filed.
invoice. Using the department PC, the clerk then enters
the billing information into the computer to record the Required
sale in the sales journal. The invoice is mailed to the cus- a. Create a data flow diagram of the current system.
tomer, the ledger copy is sent to the accounts receivable b. Create a system flowchart of the existing system.
clerk in the accounting department, and the file copy is c. Analyze the internal control weaknesses in the sys-
filed in the billing department. At the end of the day a tem. Model your response according to the six