. Write an IOM to the CEO concerning your analysis of thefollowing case stating strengths and weaknesses giving testingtools and recommendation for controls.
A Spring Water Spa Company is a 15-store chain in the Midwestthat sells hot tubs, supplies and accessories. Each store has afull-time, salaried manager and an assistant manager. The salespersonnel are paid an hourly wage and a commission based on salesvolume.
The company uses electronic cash registers to record eachtransaction. The salesperson enters his or her employee number atthe beginning of his/her shift. For each sale, the salespersonrings up the order by scanning the itemâs bar code, which thendisplays the itemâs description, unit price, and quantity (eachitem must be scanned.) The cash register automatically assigns aconsecutive number to each transaction. The cash register prints asales receipt that shows the total, any discounts, the sales tax,and the grand total.
The salesperson collects payment from the customer, gives thereceipt to the customer, and either directs the customer to thewarehouse to obtain the items purchased or makes arrangements withthe shipping department for delivery. The salesperson isresponsible for using the system to determine whether credit cardsales are approved and for approving both credit sales and salespaid by check. Sales returns are handled in exactly the reversemanner, with the salesperson issuing a return slip whennecessary.
At the end of each day, the cash registers print a sequentiallyordered list of sales receipts and provide totals for cash, creditcard, and check sales, as well cash and credit card returns. Theassistant manager prepares a daily reconciled report for the storemanagerâs review.
Cash sales, check sales, and credit card sales are reviewed bythe manager, who prepares the daily bank deposit. The managerphysically makes the deposit at the bank and files the validateddeposit slip. At the end of the month, the manager performs thebank reconciliation. The cash register tapes, sales invoices,return slips, and reconciled report are mailed daily to corporateheadquarters to be processed with files from all the other stores.Corporate headquarters returns a weekly Sales and CommissionActivity Report to each store manager for review.
. Write an IOM to the CEO concerning your analysis of thefollowing case stating strengths and weaknesses giving testingtools and recommendation for controls.
A Spring Water Spa Company is a 15-store chain in the Midwestthat sells hot tubs, supplies and accessories. Each store has afull-time, salaried manager and an assistant manager. The salespersonnel are paid an hourly wage and a commission based on salesvolume.
The company uses electronic cash registers to record eachtransaction. The salesperson enters his or her employee number atthe beginning of his/her shift. For each sale, the salespersonrings up the order by scanning the itemâs bar code, which thendisplays the itemâs description, unit price, and quantity (eachitem must be scanned.) The cash register automatically assigns aconsecutive number to each transaction. The cash register prints asales receipt that shows the total, any discounts, the sales tax,and the grand total.
The salesperson collects payment from the customer, gives thereceipt to the customer, and either directs the customer to thewarehouse to obtain the items purchased or makes arrangements withthe shipping department for delivery. The salesperson isresponsible for using the system to determine whether credit cardsales are approved and for approving both credit sales and salespaid by check. Sales returns are handled in exactly the reversemanner, with the salesperson issuing a return slip whennecessary.
At the end of each day, the cash registers print a sequentiallyordered list of sales receipts and provide totals for cash, creditcard, and check sales, as well cash and credit card returns. Theassistant manager prepares a daily reconciled report for the storemanagerâs review.
Cash sales, check sales, and credit card sales are reviewed bythe manager, who prepares the daily bank deposit. The managerphysically makes the deposit at the bank and files the validateddeposit slip. At the end of the month, the manager performs thebank reconciliation. The cash register tapes, sales invoices,return slips, and reconciled report are mailed daily to corporateheadquarters to be processed with files from all the other stores.Corporate headquarters returns a weekly Sales and CommissionActivity Report to each store manager for review.
