Business Finance Homework Help

Read the following case study and answer the questions at the end of the case.

Last year the Uptown Manufacturing Company purchased over $10 million worth of office equipment under its “special ordering” system, with individual orders ranging from $5,000 to $30,000. Special orders are for low-volume items that have been included in a department manager’s budget. The budget, which limits the types and dollar amounts of office equipment a department head can requisition, is approved at the beginning of the year by the board of directors. The special ordering system functions as follows:

Purchasing A purchase requisition form is prepared and sent to the purchasing department. Upon receiving a purchase requisition, one of the five purchasing agents (buyers) verifies that the requester is indeed a department head. The buyer next selects the appropriate supplier by searching the various catalogs on file. The buyer then phones the supplier, requests a price quote, and places a verbal order. A prenumbered purchase order is processed, with the original sent to the supplier and copies to the department head, receiving, and accounts payable. One copy is also filed in the open-requisition file. When the receiving department verbally informs the buyer that the item has been received, the purchase order is transferred from the open to the filled file. Once a month, the buyer reviews the unfilled file to follow up on open orders.

Receiving The receiving department gets a copy of each purchase order. When equipment is received, that copy of the purchase order is stamped with the date and, if applicable, any differences between the quantity ordered and the quantity received are noted in red ink. The receiving clerk then forwards the stamped purchase order and equipment to the requisitioning department head and verbally notifies the purchasing department that the goods were received.

Accounts Payable Upon receipt of a purchase order, the accounts payable clerk files it in the open purchase order file. When a vendor invoice is received, it is matched with the applicable purchase order, and a payable is created by debiting the requisitioning department’s equipment account. Unpaid invoices are filed by due date. On the due date, a check is prepared and forwarded to the treasurer for signature. The invoice and purchase order are then filed by purchase order number in the paid invoice file.

Treasurer Checks received daily from the accounts payable department are sorted into two groups: those over and those under $10,000. Checks for less than $10,000 are machine signed. The cashier maintains the check signature machine’s key and signature plate and monitors its use. Both the cashier and the treasurer sign all checks over $10,000.

Questions to Answer:

• List the various processes within Uptown’s special order process.
• What are the inherent risks to these processes?
• What internal controls mitigate the identified risks?
• Identify at least three(3) weaknesses in Uptown’s special order procedures, explain the associated problem and propose a solution.

Submission Requirements:

A Word document has been provided for you to use to submit the answers to this case study. Submission Document.docx

Use that submission document for your answers, put your name at the top of it, and save it as yourlastname_firstinitial.docx.Use the table to answer Questions 1 through 3. The table will expand to accommodate as many lines as you may need.

Process	Risk	Internal Controls
1.
2.

Use paragraphs with bullet points to answer Question 4.

Submit your document by attaching it here by the due date/time.

Grading Parameters:

• Answered the questions accurately, thoroughly, and completely.

Assigned the correct controls to the correctly identified risks