JASMINE TEA

Prepared by: Zamora, Patricia Nicole R.

About Jasmine Tea!

Largest coffee distributor in the Northeast.
The company headquarters is located at New J
ersey & the company has two distribution ware
houses located in Philadelphia and Boston.
Established in 1985, stared with purchasing fr
om one supplier
Now they have dozens of suppliers and 50 vari
eties of tea.
Last year was their most successful year with a
nnual sales growth of 6.5%

About Jasmine Tea!

Recently, the company has been receiving com
plaints from customers and suppliers about billi
ng, shipping and payment problems.
Under the current OS, each department has in
dependent computer terminals.
With this, they are seeking alternative solution
s to better serve their customers and meet the
demands.

Purchasing Process
The purchasing agent monitors the inventory a
nd decides when more tea supplies are needed.
The purchasing agent begins the process by ma
nually preparing 2 copies of a purchase requisiti
on form and then selects a supplier.
The clerk enters the purchase requisition infor
mation into a computer terminal in their depart
ment.
The terminal generates 3 hard copies of PO an
d one copy sent to supplier, another to the AP
department and third copy is filed in purchashi
ng department.

Purchasing Process
Once the purchase requisition information has
been enterned, he/she files one copy of the PR
and sends the other copy to AP.
When goods are received in Newark, the recei
ving department verifies them using the packin
g slip attached to the goods.
The goods are verified and sent to the wareho
use for storage.
The receiving clerk updates the inventory and
posts to the general ledger from a terminal in t
he department.

AP and Cash Disbursements Pr

ocedures
The AP clerk receives the supplier's invoice and
reconciles it with the purchase requisition and
PO.
Then, the clerk posts the liability to the purcha
ses journal and voucher register.
Each day, the clerk visually searches the vouch
er register file from her terminal for open invoic
es due to be paid.
Then, the clerk prepares the check.
The clerk updates the check register and vouch
er register and posts to the general ledger from
a computer terminal.

AP and Cash Disbursements Pr

ocedures
The negotiable portion of the check is mailed t
o the vendor, and a check copy is filed.
The purchase requisition, invoice and PO are th
en filed in a closed voucher file.

Required
A. Analyze the internal control weakness in the s
ystem. Model your response according to the six
categories of physical control activites specified i
n SAS 78.
B. Prepare a system flowchart of a redesigned co
mputer-based system that resolves the control w
eakness you identified.

Internal control weaknesses

Access control

Accounting records