In this flowchart it starts with the terminal for the Customer’s Purchase Order, which signifies
that there is an external party. The Customer’s Purchase Order is documented by either paper
or electronically done. Then the Customer’s purchase order goes through manual operation,
where it is reviewed for accuracy and as an internal control it is verified/approved by the Sales
Manager. Once approved the flow goes into Order Processing Clerk, who receives the
approved document of the customer’s purchase order starts the manual operations, which leads to
preparing the order and as another internal control because it is segregating duties. Then, once
the order is prepared, the Sale Order document is copied multiple times and on top of those
copied documents is the Approved Customer’s Purchase Order. Then the Approved
Customer’s Purchase Order document is processed/sent to the Off-page connector, which is
the Accounting department. While, Sales Order document is processed/sent to Shipping. Then
the Sales Order copies 2 and 3 are processed/sent to Credit. The Sales Order copy 4 is flowed
into the ending terminal, which is mailing the sales order to the customer. Then the last copy of
the sales order is filed numerically in the Sales department.
In the Credit Department it starts with the Credit Analyst and an off-page connector, which is an
entry form that flows into the copies 2 and 3 of the sales order document. Where the processing
flow goes into a decision to help determine whether or not the customers approved for credit. In
addition, as an internal control for credit approval process, it is a separate duty and will not be
part of the credit sale processing. Therefore, there is segregation of duties. Furthermore, if the
customer is not approved then it will be flowed manual operation, where the credit analyst will
send the credit application and inform the customer it was not approved. Then it flows into the
sales order documents, where it is filed numerically and temporally until the customer completes
the credit form. Thus, causing sales order approval process begins again until the customer’s
credit is approved. However, if the customer is approved for credit then the sales order and the
approved credit goes to the Credit manager. This is where the Credit Manager has to decide if the
sale will exceed the credit limit. If the sales exceed the credit limit then the customer will be
informed that their shipment will be held for the pending payment causing the copied sales order
document to be filed numerically and temporarily until the Accounting department has received
the customers payment. If the sales do not exceed the credit limit then the sales order is approved
by the Credit manager and that is when the approved sales order copies are sent to the
Warehouse.
From the Credit Department the approved sales order is received by the Warehouseman and the
warehouseman starts pulling all the goods from the inventory, note any differences, and initial
order and release it to shipping. Then the approved sales order second copy is sent to shipping
and the third copy is filed numerically as record of the approved sales order.
Once the documents reach the Shipping Department the Shipping Clerk takes over. He gets
both the sales order from the Sales Department and the approved sales order from the
Warehouse. The sales document coming from the Sales department is filed temporarily and
numerically because the receipt of goods from the warehouse is still pending. In addition, the
recount and verification by the warehouseman is a form of internal control because it is
segregation of duties. Once the approved order is received from the warehouse then the sales
order document from the sales department is put together with and the Shipping Clerk begins
checking/verifying that everything matches the sales order sheet. After it is checked for accuracy
the Shipping Clerk starts preparing the bill of lading. Then the Bill of lading is copied and paired
with approved sales order and a copy of the sales order. The copy of the sales order will be
attached to the goods as a packing list. The Bill of Lading will be sent to the Accounting
department along with the approved sales order. While, the second copy of the Bill of Lading
will be filed numerically in the Shipping department as record of the receipt and the other copy
of the Bill of Lading will be sent/given to the Freight Carrier.
In the Accounting Department an Accounts Receivable Accountant has the assigned duty to
receives the Customer’s Purchase Order from the Sales Department and the Approved Sales
Order and the Bill of Lading comes from the Shipping Department and verify the item and the
terms of the purchase order. Once, checked for accuracy the Accounts Receivable Accountant
they will start to prepare a sales invoice, and this is information that is taken from the sales order
to ensure that the customer is billed for goods shipped. In addition, comparing prices to the
approved price list to make sure the price is correct. Then the Sales invoice is copied and the
copy is sent to the customer and the original sales invoice, where it is then recorded in the sales
journal and the accounts receivable in the subledger. Then the Customer’s Purchase Order,
Approved Sales Order, Bill of Lading, and the Sales Invoice is put into the files for that customer
and is filed numerically. That is where it all ends with the Sales Invoice.
Then in the Mail Room and President’s Office, the Mail Room Clerk will receive the checks
from the Post Office Box and handles the customer check. The mail room clerk will then prepare
the cash, the receipts prelist, and the attach remittance advice information. Furthermore, the
prelist documents the separation of the custody of cash from the cash receipts recording function.
Then the Cash Receipts Prelist is sent to the President’s Office Administrative Assistant and
remittance advices and customer checks. Those checks are restrictively endorsed and a deposit
slip is prepared, where the Assistant takes the slip and the customer checks to the bank. That is
when the Bank will validate the copy of the deposit receipt. While, the original is sent back to the
accounting department along with the cash receipts and remittance advices.
Once the Accounting department receives the cash receipts prelist and remittance advices it is
handled by the Accounts Receivable Accountant. The Accounts Receivable Accountant must
decide if the shipment will be held and if it is yes then the accountant will notify the credit
department. If it is not being held then the accountant will verify the prompt payment discounts
that was taken by the customer and it will only the valid discounts that are taken and will be
recorded. Then the accountant records the receipts in the cash receipts journal and post the
customers remittance on the account to the Accounts Receivables Subsidiary ledger. After that
the cash receipts prelist and remittance advices are then filed underneath the customers file. Then
the Controller receives the banks validated deposit receipt from the President’s Office and
verified then it is filed chronologically depending on the month-end bank reconciliation in the
customers file.