11-23 Alden Case

1. I think that Alden need to establish a policies and procedures manual which would inform employees; a. Of the type of source documents individuals must use to record inventory. b. Include the accurate procedures to organize back up data for these documents. c. An inclusive description of the person in charge and responsibility assigned to each person. d. A chart of accounts that is expresses an explanation of each general ledger account so that staff record debits and credits of accounting transactions in the correct accounts. e. Describe job duties consist of. 2. Raw materials may be removed from the storeroom upon written or oral authorization from one of the production foremen: However, the raw materials should be removed from the store room only on the written authorization from an authorized production foreman. The authorizations should be numbered in serial, signed and dated to leave an audit trail. I think that the storeroom clerks should have to sign and initial some type of source document (issuance report) to who part has been issued, to allow management to know who issued and to whom the part was issued. 3. Use of perpetual inventory system: The perpetual inventory system should be recognized instead of the physical inventory system. The total value of the inventory as per the perpetual records should be matched with the general ledger at regular intervals. 4. Raw materials are purchased at a predetermined reorder level and in predetermined quantities: The raw materials should be purchased according to requests received from the production department managers and be based on the data as per the perpetual records. 5. The merchandise received is not inspected: The goods should be checked for compliance with the standards of quality upon the receipt. 6. All vendors bills of laden are initialed, dated, and filed in the storeroom to serve as receiving reports: The vendors’ bill of laden

References: Moors, J. A. (2000). Repeated audit controls. 54(1), 3-13. doi: 10.1111/1467-9574.00122 Weber , R. (1998). Information systems control and audit. Retrieved from http://dl.acm.org/citation.cfm?id=601500