Required – USING the VISIO software available in our classroom or the lab: 1. Develop a context diagram and a Level 0 DFD for this process. 2. Prepare a document flowchart for this process. Use summary and detail pages if necessary for legibility. 3. Prepare a business process diagram for this process. Use summary and detail pages if necessary for legibility. Submit your completed VISIO workbook to the corresponding Blackboard link by the given due date for course credit. Hand-drawn work product will be accepted, but not earn course credit. Scenario – You are a staff auditor at a regional CPA firm. Your manager assigned you to document the cash receipts system at a new client in preparation for the audit and internal control analysis. You interview client employees associated with the process and compile the following facts. • Customer payments include cash received at the time of purchase and payments received in the mail. Payments received at the time of purchase are supported with a cash register tape. o At the end of each cashier's shift, the cash register drawer is balanced to the cash register tape in the cash office by the cash office clerk, witnessed by each cashier. o All checks are stamped “For Deposit Only” with the company's bank and account number. o Balanced drawer contents are locked in the cash office safe, each individually bundled with its register tape. Each time a new balanced bundle is secured, a total of the bundles is updated. o Empty drawers are left open and placed on a shelf in the cash office. • The mail room routes customer payments received to the cash office. Each envelope includes a remittance slip to help clerks credit the correct customer account.
o Two cash office clerks open each envelope and cross reference the enclosed checks and remittance slips. Checks are examined to ensure they are made payable to the correct company. Sometimes a customer will mismatch remittances and payments and mail them to the wrong person. Such errors are set aside with the envelope contents. After the mail is opened and all erroneous mail is collected, the cash office manager completes a form letter for each one and sends it to the customer by mail with the original materials received.Sometimes customers forget to fill in the amount paid or write in an amount that doesn't match the actual payment. Errors noted are verified by both clerks; one will correct the remittance slip. o All correct checks are stamped “For Deposit Only” with the company's bank and account number. o An adding machine tape total of the correct payments received by mail is taken and bundled with the verified payments. The bundle is secured in the cash office safe, just like a balanced cash drawer. • At day's end, the treasurer collects all balanced drawer bundles from the cash office safe, and totals them. The total is compared to the total of all balanced bundles maintained by the cash office. o Remittance slips are totaled and sent to accounts receivable with a transmitting total slip.
o Checks are totaled. A deposit slip is prepared for the checks. This deposit is secured in a bank envelope. o The change fund, petty cash on hand, and cash amounts received are added together. The company likes to keep no more than $10,000 on hand between the change fund and petty cash. The treasurer decides how much cash should be deposited based on this preference. Any amount over $10,000 and all $50 and $100 bills will be included in the deposit total. Another deposit slip is prepared and the cash deposit is secured in a separate bank envelope. o The treasurer apportions $300 in small bills and change into each empty register drawer in preparation for the next day's business. The fresh drawers are received by the cash office clerk and secured in the safe overnight. Any amounts over $300/drawer are retained in the treasurer's office safe (petty cash box) and the balance noted.
o The treasurer prepares and posts the journal entry for the deposits. An account called “customer payments received to be credited” holds the gross credit for payments on account which was totaled earlier. o On their way home each evening, the treasurer drops the prepared deposits into the bank's night drop. • The next morning, the accounts receivable clerk receives the remittance slips. o The slips are totaled and compared to the total noted on the transmittal prepared by the treasurer and received in the bundle. o Remittance slips received are used to update the customers' accounts receivable records. o The total payments posted are used to prepare the deposit journal entry, which credits accounts receivable and debits the “customer payments received to be credited” account used by the treasurer the night before. o Remittance slips and transmittal are stamped “Posted” and stored together in a file drawer by date. • Weekly, the Accounts Receivable Manager prepares a cash receipts report and an aged trial balance using the updated accounts receivable ledger. • The Sales Manager, CFO, and President receive and review the prepared cash receipts report. • The Credit and Collections Manager receives and reviews the aged trial balance. • Monthly, the Accounts Receivable Manager prepares and mails account statements to all customer accounts with a beginning non-zero aged balance more than 30 days old. (Accounts paid off this month will receive a statement showing that activity and their new zero balance.)
