Bradmark Wholesale General Supply

An ACL Case Study

Bradmark is a wholesale general supply company that ships to business customers
throughout Northeast Pennsylania! New "ork state! and Southern Connecticut#
Bradmark has deeloped a competitie edge by o$$ering a wide ariety o$ %uality
products at competitie prices# &he company's products range $rom paint to watering
cans#
Bradmark is a publicly owned company! whose board o$ directors has retained your $irm
to conduct the annual audit# "ou are the in(charge auditor who is currently e)amining
Bradmark's reenue and e)penditures procedures and related accounts# Bradmark's main
o$$ices are in its Allentown! PA warehouse# &he $ollowing describes your client's system
con$iguration and business procedures#
System Overview and Background
Bradmark's in$ormation system is a recently purchased application that runs on a client(
serer network con$iguration# *ames Walker! a systems designer in Bradmark's +&
department! played a central role in implementing and modi$ying the system to meet
Bradmark's speci$ic needs# Because o$ Walker's $amiliarity with the system! he was
asked by top management to temporarily oersee the initial running o$ the new system to
ensure a smooth transition $rom the old legacy system# A$ter seeral months! *ames
Walker was o$$ered a promotion to Warehouse ,anager and gien permanent
responsibility $or product purchasing#
Sales and Cash Receipts Procedures
&he $lowchart in -igure . and the record layout in -igure / 0see the related PowerPoint
$ile $or $igures1 illustrate Bradmark's sales and cash receipts procedures#
Sales Department
Customer orders are receied by mail or $a) in the sales department# 2ne o$ the sales
sta$$ accesses the customer record and reiews the aailable credit be$ore creating a Sales
+noice record# -or customers with insu$$icient aailable credit! the clerk submits the
order to the credit manager $or approal# +$ granted! the credit manager erbally
authori3es the clerk to increase the customer's line o$ credit accordingly# -or approed
sales! a record is added to the Sales +noice $ile# &he system automatically assigns an
+noice Number! which is the primary key $or the record# &he clerk manually enters the
remainder o$ the order data#

Warehouse
Based on input $rom the sales inoice! the warehouse terminal automatically prints a
stock release document! which the warehouse sta$$ uses $or picking the goods# &he goods
are sent to the Shipping 4epartment along with the stock release document# 2nce the
goods hae le$t the warehouse! the clerk con$irms to the system the %uantity sold and it
automatically updates the 5uantity on 6and $ield in the respectie inentory record#
Shipping Department
&he shipping department receies the goods! prepares them $or shipment! selects a carrier
and prepares the packing slip and bill o$ lading 0B2L1# 2nce the goods are shipped! the
clerk adds a record o$ the shipment to the Shipping Log $ile#
Billing
At the end o$ the day the system automatically searches the Sales +noice and Shipping
Log $iles $or items shipped and prepares a hard copy customer inoice! which is mailed to
the customer the $ollowing morning# &he current date is then placed in the 4ue 4ate $ield
o$ the Sales +noice $ile#
Cash Receipts
,ary! the cash receipts clerk! receies the customer checks and remittance adises
directly $rom the customer# She records this transaction by entering the +noice Number
0taken $rom the remittance adice1 into the system# &he system automatically creates a
Cash 7eceipts record# +t assigns a 7emittance Number as the primary key and adds this
number to a $ield in the related Sales +noice record# &he +noice Number $rom the Sales
+noice is also added to the remittance record as a re$erence# ,ary then manually adds
the customer number! amount! and payment date to the Cash 7eceipts record# At the end
o$ the day she prepares a deposit slip and sends the checks to the bank# She $iles the
remittance adice in her o$$ice#
Purchasing/Payment Procedures
&he $lowchart in -igure 8 and the $ile structure diagram in -igure 9 illustrate the
purchasing:payment procedures at the central warehouse#
Warehouse
;ach morning Walker reiews an automatically generated inentory status report $rom his
o$$ice terminal# 6e determines the items that need replenishing and selects suppliers $rom
the <endor $ile# Walker then adds a record to the purchase order $ile# &he system assigns
each new record a uni%ue number 0P2 Number1 as the primary key# Walker manually
enters the date! the product to be ordered! order %uantity! e)pected unit cost 0the e)tended
cost is automatically calculated by the system1! and the +4 number o$ the selected endor#
&he purchase orders are then printed on Walker's terminal! signed by him! and mailed by
his secretary to the respectie suppliers#
Receiving
When the products are receied at the receiing dock! a receiing clerk counts and
inspects them# &he clerk adds a record to the 7eceiing 7eport $ile $rom the terminal in
the receiing area# &he system assigns a uni%ue key 077 Num1 to each record# &he clerk
manually enters the purchase order number! product number0s1! %uantity receied! endor
+4 number! and the date o$ receipt# &he receiing system is not particularly user $riendly#
+$ errors are made during data entry! the clerk must oid the receiing report and begin
oer with a new receiing report record# &he oided record is then automatically purged
$rom the 7eceiing 7eport $ile and the system assigns the ne)t 77 Number in se%uence
to the reised receiing report# As a result! se%uence gaps e)ist in the receiing report
$ile indicating the missing records# &he products are then sent to the warehouse where
they are secured# At the end o$ the work shi$t! the receiing clerk prints a hard copy o$ the
receiing report listing o$ the day's receipts 0including any oided receiing reports1!
which is sent to *ames Walker's o$$ice $or his reiew#
Warehouse
A$ter ,r# Walker has reiewed the receipts he manually adds the system(assigned 77
Number to the corresponding Purchase 2rder record to indicate that the product has been
receied# &he system automatically updates the 5uantity on 6and $ield in the +nentory
$ile $rom the 5uantity $ield in the Purchase 2rder record#
Accounts Payable
Sybil *ohnson! the Accounts Payable clerk! receies the endor's inoices# =sing the P2
number $rom the inoice as a search key! she matches the inoice with the corresponding
purchase order:payment record# She eri$ies that the items inoiced hae been receied
by obsering that a 77 Number has been placed in the Purchase 2rder record# She then
adds a record to the <oucher Payable $ile# &he system assigns a uni%ue key 0<oucher
Number1 to each record# Sybil enters manually the $ollowing data directly $rom the
supplier's inoice> purchase order number! endor number! supplier inoice number! $ull
amount due! discounted amount due! and due date# &he due date is selected to take
adantage o$ purchase discounts# -inally! Sybil $iles the endors inoice in her o$$ice
$iling cabinet#
Cash Disbursements
;ach day! Sean 2'Connell in the Cash 4isbursements department reiews the <oucher
Payable $ile $or items due to be paid that day# -or each item due! he adds a record to the
Check 7egister $ile# &he system assigns it a uni%ue key 0Chk Number1 and Sean
manually adds the $ollowing data to the Check 7egister record> oucher number! endor
number! amount o$ payment! and date# &he system automatically places the check
number in the appropriate <oucher Payable record to indicate that payment has been
made# &he checks are printed in Sean's o$$ice and then reiewed and signed by +ring
Stern! the department manager#
General Requirements
Go to the Bradmark Case Questions $older and select the appropriate %uestions $or the
chapter you are working with((7eenue Cycle 0Chapter ?1! ;)penditure Cycle 0Chapter
.@1! or -raud +ssues 0Chapter ./1# &his case re%uires that you install ACL 4esktop
;dition 0$ull educational ersion1 that came with new copies o$ the te)tbook on your
computer# &he data $or the ACL portion o$ the case %uestions are located in the
Bradmark ata !older#