The following is a list of 12 control plans from this chapter or from Chapters 9 and 10....

The following is a list of 12 control plans from this chapter or from Chapters 9 and 10.

Control Plans

A. Review shipped but not billed sales orders

B. Confirm customer balances regularly

C. Enter shipping notice close to location where order is shipped

D. Check for authorized prices, terms, freight, and discounts

E. Hash totals (e.g., of customer ID numbers)

F. Computer agreement of batch totals

G. Key verification

H. Compare input sales return notification to AR master data

I. Immediately endorse incoming checks

J. One-for-one checking of checks and RAs

K. Immediately separate checks and RAs

L. Reconcile bank account regularly

The following are 10 system failures that have control implications.

System Failures

1. After goods are delivered to the common carrier, the shipping department at Stanley, Inc. prepares a three-part shipping notice. Copy 2 of the notice is sent to billing to initiate the billing process. Many shipping notices have either been lost in transit or been delayed in reaching the billing section.

2. Bar-Jacob Company was given a refund for a sales return even though the return was received and processed months after the sales terms allowed such a return.

3. Because the mailroom clerks at Holdington Corp. do not take batch totals of incoming customer checks, the cashier has misappropriated several thousand dollars over the years by depositing company checks to his personal bank account.

4. Nichol, Inc. uses periodic processing for entering sales invoice inputs and updating customer accounts. Although it uses certain batch totalprocedures, Nichol has experienced a number of instances of recording sales invoices to incorrect customer accounts.

5. Grant Company customers send in their payments with an RA on which they write the amount being paid. These amounts often do not agree with the amount of the payment. As a result, the cash and AR balances at Grant Company are not correct.

6. The balances due from customers at Wright Company are months overdue.

7. At Jefferson, Inc., shipping sends shipping notices to the data entry group in data processing, where they are keyed. During the past month, an inexperienced data entry clerk made several errors in keying the shipping notices. The errors were discovered when customers complained about inaccurate invoices.

8. Sales at Macon Corp. have declined considerably compared to those of the preceding year. In an effort to improve the financial statements, the vice president of finance obtained a supply of blank shipping notices on which she fabricated 100 fictitious shipments. She submitted the fictitious documents to the billing department for billing.

9. The mailroom at Gardener Company forwards checks and RAs to the accounts receivable department. A clerk checks the RAs against open invoices, as reflected on the accounts receivable master data. It is not uncommon for the clerk to note discrepancies, in which case the customer is contacted in an effort to reconcile the differences. After all the discrepancies have been investigated and cleared, the accounts receivable clerk releases the checks to the cashier for deposit.

10. Clerks in the billing department at Canterbury Enterprises, Inc. prepare sales invoices from a copy of the packing slip received from the shipping department. Recently, the company has experienced a rash of customer complaints that the customers have been billed for freight charges, despite the fact that the freight terms were FOB destination.

Match the 10 system failures with a control plan that would best prevent the system failure from occurring. Also, give a brief (one- to twosentence) explanation of your choice. A letter should be used only once, with two letters left over.