Danielle Wongus processes hundreds of sales orders monthly for contractor tools
ID: 2427588 • Letter: D
Question
Danielle Wongus processes hundreds of sales orders monthly for contractor tools for Cambridge Wholesale Industries. The company sells the tools to retail stores in the Mountain stores. Some are shipped from inventory, but others are shipped directly to the retail stores form vendors. Direct shipment results in significant freight savings. In most cases, Danielle receives the sales order request from the salespeople, but in other cases the orders come directly to Danielle by phone from customers who want direct shipments or who are used to buying directly from the company. Danielle processes the order through the Sales Orders task icon and sends the sales order to shipping, which results in the shipments being sent. When sales orders are initiated by the shipping department after the goods are shipped, they are sent back to Danielle for billing. She processes them using the Sales Invoices task icon and sends the sales invoice tot eh customers.
Several years ago, Danielle’s brother-in-law formed a small business, Idaho Valley Hardware that sells certain contractor tools. Idaho Valley Hardware orders some of their tools from Cambridge Wholesale Industries. When the order comes in, Danielle processes the order like any other sales order to initiate the shipment. The shipping department ships the goods and initials the sales order, indicating shipment has occurred. If the amount shipped differs from the amount on the sales order, shipping changes the shipping order. When the initialed sales order is returned to Danielle, she sometimes destroys the sales order and does not prepare a sales invoice. Other times she records a lower price for the sales than the normal amount or bills for less goods than were shipped.
Later, Danielle does one of three things. In some cases she prepares a credit memo for an allowance for defective merchandise or a pricing error. Other times, she deletes the transaction entirely to eliminate the account receivable from the records. Another method that Danielle uses to conceal the fraud is to give a larger early payment discount than the normal 2% allowed by company policy when processing cash receipts.
Required:
Suggest improvements in the system including both Sage 50 Accounting control and other system improvements to minimize the likelihood of this fraud. Danielle must process sales invoices. It is impractical, given the size of the business, to restrict Danielle to only one of the Sales Orders, Sales invoices, Credits and Returns, and Receive Money task icons
Explanation / Answer
improvements needs to be developed in the system of Sage 50 Accounting control for sales order processing
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