• The functions of credit checking, accounts receivable updating, customer billing, inventory updating, and posting to the general ledger are performed automatically by the central computer system
• Cheaper and far less prone to error
• Traditional department exist – refocused on exception-based problem solving 

• Begins with sale clerks receiving customer orders, which may be hard-copy documents or may be received via email, fax, or phone. 
• The clerks enter the sales order and initiates some tasks (textbook pg.165-166) using a computer terminal connected to a central sales order system. 

• Customers make payments on account with physical checks that are mailed to the company 

• Clerk > open envelopes (checks and remittance advices – endorses for deposit only 
• Reconciles the checks and RA and prepares a remittance list 
• Checks, RA, and a copy remittance list > cash receipts department

• Clerk prepares deposit slips 
• Clerk accesses the cash receipts system and creates a record in the remittance list (cash  receipts journal) for each RA received. 
• Clerk files RL, RA, and one copy of deposit slip

• When cash receipts data entry is complete, the system automatically performs the tasks (textbook pg.168) 

• A clerk periodically performs a reconciliation of RL, bank deposit slips, cash receipt journals and the GL cash accounts

• To mitigate the risk from errors and fraud

1. Selling to un-creditworthy customers 

• Transaction authorization-credit check
• segregation of duties-separate credit and sales functions

• Automated credit check

2.  Shipping customer the wrong items

• Independent verification - shipping department reconciles shipment with order

• Scanner technology 
• Automated inventory ordering 

3. Inaccurately record keeping 

• Transaction authorization-remittance list
• Accounting records-audit trail documents, journals, accounts, and files
• Independent verification-shipping, billing, and GL 

• Input data edits
• Automated posting accounts
• File Backup

4. Misappropriation of cash receipts and inventory 

• Transaction authorization-remittance list
• Supervision - mail room
• Access control - warehouse security, daily deposits of cash, nights deposit box, and locked safes 
• Segregation of duties - cash receipts, general ledger, AR function, warehouse, inventory records

• Multilevel security to achieve segregation of duties 

5. Unauthorized access to accounting records and confidential reports 

• Access control - source documents, journals, and ledgers 
• Segregation of duties - sub ledger, GL, and asset custody 

• Password control
• Multilevel security to prevent unauthorised access to data