Maple Component Corporation Case Study

In the revenue cycle system of Maple Component Corporation, there are some controls in the system which are effective in preventing the occurrence of the event of uncollectible sales revenues, shipping errors, billing errors and theft of checks or cash in the company. Thus, a revenue cycle system with effective control is important to avoid the losses of sales and assets in the company and enhance customer satisfaction and company reputation. One of the effectiveness found in the revenue cycle system of the company is proper authorisation of transaction in the credit department. In the description of key business processes, the credit clerk checks the credit copy received from the sale department against the approved list of customer, credit

The sales order clerk checks on the goods availability after getting approval of transaction from the credit department by using computer with system that showing quantity of inventory on order, on hand or committed to others. This indicates that the company maintained an online inventory system which allows real-time recording of changes on inventory. The checking process of availability of goods is an effective control in the system as this will avoid the problems of unprocessed order and customer dissatisfaction. For example, if the sales order is sent to the customer before the clerk checking of the availability of goods, the customer would be inaccurately advised of the status of order which may lead to customer dissatisfaction. Hence, the sales order clerk checks on the availability of goods is an effective control in the system to ensure that customer is being advised accurately on the order

Therefore, these weaknesses will cause the company to face reduction of profit, loss of assets and bad reputation.
The first weakness that found in the company’ system is lack of segregation of duties in the warehouse department. According to the description of the key business processes, it stated that the warehouse employee will pick the product and sends it together with the stock release to the shipping department. Besides that, the warehouse employee will also update the records of inventory on the computer and files the sales order in the department. Therefore, this shows that there is no segregation of duties in the warehouse department where the employee have both custody and recording functions which this will increase the possibility of employee to conduct asset misappropriation. For example, the warehouse employee can steal the company’s inventory and manipulate the number of inventory to be recorded in the computer’s system in order to conceal his theft of