Sales Accounting System Risks Essay

1775 Words Sep 28th, 2010 8 Pages
St. James Clothiers
Evaluation of Manual and IT-Based Sales Accounting System Risks

Copy Right: Anthony Butka Ralph Avallone Hong-Ming Yen

Executive Summary
Case Synopsis
We meet Sally St. James of St. James Clothiers who has a retail clothing store in Tennesse. Sally has decided to abandon her manual sales entry system and convert to a more sophisticated IT-based application. As the audit engagement team we have been asked to review narratives of former years and then draft a narrative for the new system. We will address the weaknesses of having a manual based sales entry system. We will discuss how switching to an IT-based will take care of some of those weaknesses. We will then talk about some of the new risks that Sally St.
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c. The new computer system will require codes which will identify who is using the register and segregate duties by allowing certain transactions based on the user identified at the register via their pin. Now the computer can split reports of who entered what transaction into the register and therefore be able to hold the appropriate parties responsible. d. This will not be possible in the computer as it will download reports and send a read only copy to the accountant, this way there’s no way the accountant can hide or change sales transactions and no need for the accountant to be physically present. e. The new system will allow the sales clerks to help, the pin used at computer will now identify who handled which transactions and a report can be downloaded later in order to monitor a particular clerks transaction history. f. Now with the new IT system, only identified employees can process returns. The computer system will match the return of the item with the original transaction which will avoid discrepancies.

g. Without the ability to see physical store receipts, no alteration can be made and the deposit slip must match the computers sales amount or else an exception report is sent to the owner.

5.4.3 The use of an IT-based sales system generally will solve a lot of the manual sales accounting

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