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sends one copy to the purchasing department to close out the open PO, files one copy along with the pack- ing slip in the receiving department, and sends one copy with the inventory to the warehouse. When the AP clerk receives a hard-copy invoice from the vendor, she reconciles the invoice with the purchase order, records the liability in the AP sub- sidiary ledger from the terminal in her office, and assigns a due date for payment. 6. PURCHASES SYSTEMRISKS AND The warehouse clerk receives the inventory, recon- CONTROLS ciles it with the receiving report, and updates the inven- tory subsidiary ledger from a terminal in the warehouse. Review the following description of a purchases sys- tem and answer the questions at the end. The purchasing agent periodically checks inven- Required tory levels from a computer terminal, which is con- a. Create a system flowchart of the system. nected to a central accounting system. The agent b. Describe the uncontrolled risks in the system. searches the inventory file for items that need to be c. Describe the physical controls needed to reduce ordered. He then selects a supplier, prints a hard the risks identified in (b). copy of the purchase order, and mails it to the ven- dor. The clerk files one copy of the PO in the depart- ment and sends a second copy to the AP clerk. When the inventories arrive at the receiving depart- ment, a receiving clerk reconciles the items with the packing slip, inspects them for condition, and manu- ally prepares a three-part receiving report. The clerk

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