St James Clothiers

Risks of Manual System | Impact on Financial Statements | IT System Features that Mitigate Manual Systems Risks |

Manual input by cashier of product number and sale prices increases the risk of human error | Increase the risk of misstatement of sales | Sale price generated internally from a Price List Master File only on valid product numbers entered |

Sale price determined from clothing price tag, advertisement, in-store sale signs or salesperson | Increases risk of incorrect valuation of sales | Sale price will only be processed if valid or existing product numbers are entered |

Manual calculations of total sales amount, including sales tax, increase the risk of mathematical errors | Increases risk of incorrect valuation of sales | Computer calculates total sales amounts, including pre-tax sales and sales tax amounts |

Manual input of pre-tax sales total and sales tax amount into cash register by cashier | Increases risk of incorrect valuation of sales | Computer calculates totals sales amount from information entered originally |

Cash register can be opened by pressing the “total” button, which increases the risk of cash theft | Increases risk of cash balance misstatements | Cash drawer can only be opened after a sale or with a special password code by manager |

Placing the manual sales tickets in the file box increases the risk of tickets being lost or changed | Increases the risk of misstatements in sales/bonus accounts | There will be no duplicate paper receipt. Instead daily sales will be stored internally and posted automatically to the Sales Journal |

Return policies do not include matching “reverse” sales ticket to merchandise | Increases the risk of misstatements in cash or inventory accounts | Returns can only be processed by the manager using a special password code. The computer uses to then update the perpetual inventory count |

3. New risks for material misstatements from the new IT-based sales systems include no duplicate...