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Incomplete or inaccurate customer orders

Data entry edit checks

Credit sales to customers with poor credit

Credit approval by manager, not by sales function; accurate records of customer account balances

Legitimacy of orders

signatures on paper docs, digital signatures and digital certificates for e-business

stockouts, carrying costs, and markdowns

inventory control systems; sales forecasts; periodic physical inventory counts

shipping errors, wrong merchandise, wrong quantities, wrong address

reconciliation of sales order with picking ticket and packing slip; barcode scanners; data entry applications controls

theft of inventory

restrict physical access to inventory; documentation of all internal transfers of inventory; periodic physical counts of inventory and reconciliation of counts with recorded amounts; RFID and barcode technology

Failure to bill customers

separation of shipping and billing functions; prenumbering of all shipping documents and periodic reconciliation with invoices; reconciliation of picking ticket and bills of lading with sales orders

billing errors

data entry controls; price lists

posting errors in updating accounts receivable

batch totals; reconciliation of subsidiary accounts receivable ledger with general ledger; monthly statements to customers

theft of cash

segregation of duties; minimization of cash handling; lockbox arrangements; prompt endorsement and deposit of all receipts; periodic reconciliation of bank statement with records by someone not involved in cash receipts processing

loss, alteration or unauthorized disclosure of data

backup and disaster recovery procedures; access controls (physical and logical); proper systems configuration; encryption; data transmission controls

poor performance

preparation and review of performance reports

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