The Following Narrative Describes a Cash Receipts Process

Essay

The following narrative describes a cash receipts process. The annotated systems flowchart for this cash receipts process is TB Figure 11.14 and the related control matrix is Figure TB 11.15.
Narrative Description
TB Figure 11.14 presents a physical description of the cash receipts process in which customer payments are received by mail. The source documents include checks and RAs. Each day, the process begins with mailroom clerks opening the mail. Immediately, the clerks endorse all checks. They assemble RAs (stubs from the customer invoice-i.e., turnaround documents) in batches and prepare batch totals. The cash receipts data-batch total and remittance details-are then entered into the computer system via a scanner with OCR. The computer edits the data as the data are entered and computes batch totals. The batched RAs are sent to the accounts receivable department for filing, and the checks are transferred to the cashier. The editing process verifies the correctness of the entered data, including customer number and so forth. By matching the input cash receipts data to the open invoice data that reside on the accounts receivable master data in the enterprise database, the process also verifies that the customer account number, invoice number, and amount due are correct and that any cash discounts taken by the customer are legitimate (i.e., they have been authorized). After the data have passed all the control checks, the cash receipts event data, accounts receivable master data, and general ledger data are updated in the enterprise database. Also, the computer generates various cash reports and prepares the deposit slip. The deposit slip is transferred to the cashier. The cashier compares the checks and the deposit slip; if they agree, all documents are sent to the bank.
Required:
Using the format shown for control plan P-3, write descriptions for control plans P-1, P-2, P-5, M-1 and M-3.
P-3: Enter cash receipts close to where cash is received.
.Effieiant employment of resouress: The direct enty of cash receipts data by mailroum persannel provides far a more efficient empldyment of resaurces because this
arrangement elininates the costs a5saciated with the handling of the cash receipts data by additional entities.
.Remittanes arvies input accuracy: Because mailoan persannel wauld have both the check and the RA, they wald be in aposition to carrect many ingut errars "an the spot," thereby improving ingut accuracy.