Using your knowledge of Boston Beer as well as the process t

Using your knowledge of Boston Beer as well as the process the flow maps, design the internal controls for their revenue cycle. Justify why each element of your process flow is included.

\"The Boston Beer Company typically receives orders in the first week of a month for products to be shipped the following month. Products are shipped within days of completion and, accordingly, there has historically not been any significant product order backlog. During 2009, Boston Beer sold its products through a sales force of approximately 265 people, which the Company believes is one of the largest in the domestic beer industry. The Company’s sales organization is designed to develop and strengthen relations at each level of the three-tier distribution system by providing educational and promotional programs encompassing distributors, retailers and drinkers. \"

Start Here Cash Reconciliation Customer\'s Purchase Orders, Contra 4 Orders Payments (Cash Receipts) Cash Receipts Recording Collections Deposit Cash in Bank Cash Custody Accounts Receivable Recording Sales Authorization Monthly Statements Sales Invoice Bill Customers Credit Granting Credit Files, Reports Physical Custody To Customer To Customer Warehousing Shipping and Delivery Shipping Documents To Customer Accounts/Records Accounts Receivable Master File hipping Document Transaction File Cash in Bank Cash Receipts Accounts Receivable Allowance for Doubtful es Receipts Transaction File Revenue Account(s) Perpetual Inventory Records Accounts, Write-Offs Bad Debt Expense Sales Revenue Sales Returns, Allowances, Shipping Docu- Shipping Cash Balances Account) File ments (Copy) Discounts Copy) Perpetual Inventory Records, Customer Shipping Records Order Sales Invoice Bank Statements

Solution

Internal control - They are the methods to ensure the integrity of financial and accounting information, transmit management policies and meet operational and profitability targets.

Internal controls:

1. Data entry edit controls should be maintained.

2. Digital or written signatures should be there to combat invalid orders.

3. Credit evaluation, approval and limits.

4. Best customer service should be given to retain customers.

5. Bar-code, RFID, automated handling.

6. Segregation of duties: bill, record, adjustments.

7. Use software to create invoice based on sales .

8. Hire competent people and train them.

NOw analysing the above case:

1.ourchse orders must be genuine and banofied no fake orders and every order documented .

2.in accounts receivable recording there there must be no fictitous entries and every receivalbe must be accountable and nothing is deviated from the records of the company.

3.cash custody : every day cash must be reported and must be tallied and there must be a control on receiving and paying cash it must be under proiper authorisation.cash receipt file must be maitianed.account file must be reconcield with daily balances.

4.bank statement smus be verified and it is advisable to do all the transactions through bank so that everytinh is documented and there is no place of misappropriation of cash.

5. ensure sales is not fictitious.check for the dummy sales recognition creation hipe of debtors and there by worng opinion in financial statements.sales must be under authorised personnel\'

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