Adidas

Adidas is a manufacturer of sport equipment.

Sales ordering, goods despatched and invoicing

Adidas sells sport equipment to a range of large and small sports equipment retailers in several countries. Sales are made through a network of sales staff employed by Adidas, but new customer leads are generated through a third party company. Sales staff are responsible for assessing new customers' creditworthiness and proposing a credit limit which is then authorised by the sales director. The sales staff have monthly sales targets and are able to use their discretion in granting sales discounts up to a maximum of 10%. They then record any discount granted in thecustomer master data file.

The sales staff visit customer sites personally and orders are completed using a two-part pre-printed order form. One copy is left with the customer and the other copy is retained by the sales person. The sales order number is based on the sales person'sown identification (ID) number.

The company markets itself on being able to despatch all orders within three working days. Once the order is taken, the sales person emails the finance department and warehouse despatchteam with the customer ID and the sales order details and from this a pick list is generated. Sequentially numbered goods despatched notes are completed and filed in the warehouse.

Sequentially numbered invoices are generated using the pick lists for quantities and the customer master data file for prices. Standard credit terms for customers are 30 days and on a monthly basis sales invoices which are over 90 days outstanding are notified to the relevant sales person to chase payment directly with the customer.

For the selected Company a team of 3-4 students need:

1) Describe a control environment in the Company and evaluate whether the control environment is strong or not and how it affects on Companys internal controls.

(10%)

2) Understand a business process of the Company (illustrate aflowchart, showing every step of this business process and demonstrate whether a step is manual or automated, does itinvolve hard copy or electronic documents). The following template can be used in drawing a flowchart.