Stephanie Ng

Advanced Communications in Accounting

Walkthrough Corrections
Information and corrections that should be added into the original walkthroughs are highlighted.
Sales Manager: Chris Sykes
Sales Manager Chris Sykes is new to the team. His team includes the Head of Sales, the Supervisor,
and three salesmen. New employees have to go through an annual training program, onboarding
with the staff, and a meeting with the executives of the Company.
The company's sales breakdown includes 80% from the website, 10% from transactions with
salesmen, and 10% from call centers.
Sales are initiated through a purchase order in the sales application system. The system runs a batch
process which queues up the purchase orders for review by the sale department.
Existing Customers:
All existing customers have a log on name and password that they must enter to get to the purchase
order screen
New Customers:
In case of a new customer, a data entry window pops up on the screen automatically. The data entry
window needs to be completed in order to create a customer profile in the customer database for
the new customer. The customer profile needs to be set up before the purchase order can be further
processed. The data entry window for the customer profile requires at least the name and the
address of the new customer and an individual credit limit before the window can be closed. Only
the sales department employees can enter or change a credit limit but it must be approved verbally
by the head of the sales department before it is entered or changed. However, verbal approval is not
sufficient, so an order confirmation is emailed to the customer. On a weekly basis the head of the
sales department receives a report for review that shows all changes to credit limits of existing
customers and all newly entered credit limits for new customers. Once all required information is
entered, the Sales Application System assigns a unique customer number for the new customer.
For each purchase order entered, the Sales Application System automatically creates an internal
order number. The Sales Application System automatically matches the types of products to the unit
prices in the pricing database. The Sales Application System also automatically generates an
confirmation that shows the order number, unit prices, total, and delivery date. The margins by
product are a consistent range. The data in the pricing database can only be changed by the head of
the sales department. The Sales Application System does not allow any manual price overrides, i.e.,
the price data field cannot be changed. Application edit checks (defined within the system) ensure
that all mandatory data fields are filled with the necessary information. The Sales Application also
prevents the Sales Department from approving high credit limits in order to boost sales. If not all
mandatory fields are completed, the order cannot be processed. As soon as the order is entered the
ordered quantities of the items get blocked in the Warehouse Application System for other orders.
This ensures that the goods are still available when the warehouse prepares them for dispatch.

After all required data have been entered, the Sales Application System automatically calculates the
overall value of the order and undertakes the following automatic checks with the customer
database:
Customers order is within the credit limit. The orders are classified into three buckets. The order can
be a small cap where it is under $100,000 with a customer credit limit of $5,000, mid-cap worth
$100,000 to $500,000 with a customer credit limit of $15,000, and premier cap worth over $500,000
with a customer credit limit of $25,000.
Customer is not flagged with a Delivery Stop (Bad customers get flagged with this attribute).
"Delivery Stop" occurs when a loan is outstanding for more than 90 days. The "Delivery Stop" is
removed when the sales supervisor and manager review the situation and the customer pays off
debt.
The Sales Application System automatically generates an order confirmation. The order confirmation
contains the order number, the quantities, the unit prices, overall value of the order and the
expected date of delivery. The order confirmation is automatically e-mailed to the customer.
If any issues with the order come up while entering the data into the Sales Application System the
purchase order will not be processed. Instead, the purchase order is sent back to the sales
department supervisor. This is also the case when some of the ordered goods are not in stock.
Partial shipments are not made. The sales manager will follow up with any issue and might clarify
with the customer. If a client has exceeded his credit limit the sales manager needs to contact the
head of the sales department, who has to approve the exceeded limit. The Head of Sales also
approves of the discount. Usually the automatic system checks for errors in customer limit and the
amount and type of product delivered. The order then goes back to the sales department where it is
processed. Very few errors have occurred.
A sales department clerk reconciles each processed purchase order with the captured data in the
Sales Application System on a daily basis. He documents his check by stamping and signing the
purchase order. The customers processed purchase order is archived by the sales department based
on the order number.

Accounting Manager: Pat Sullivan

The Accounting Team consists of a manager, two senior accountants who perform the monthly
reconciliations, and two accounting clerks who download sales activity payment reports, two
accounts receivable clerks, and two cash payment clerks. The Accounting Manager, Pat, participates
in overseeing and reviewing daily and weekly processes. Pat also plays a role in enforcing staff
responsibilities, reviewing customer issues and discrepancies in reports, and facilitating the
inventory count.
Once a purchase order has fulfilled and shipped, the Accounting department will get a report from
One Source indicating all of the customer orders that shipped along with the invoice numbers and
amounts. The OneSource system maintains the customer sub ledger detail for accounts receivable
(A/R).
The A/R report has the customer charges as well as an inventory adjustment report which includes
the cost of the items that shipped. These report are posted on weekly basis to the general ledger by
the accounting clerk. The accounting clerk will debit accounts receivable credit revenue for the

gross amount of the invoice. The clerk will also debit cost of goods sold and credit inventory for the
amounts shown on the inventory adjustment report.
There are two A/R clerks who are responsible for mailing invoices and managing aging and
collections on A/R. The invoices are mailed monthly to the customer. The A/R clerks perform a
monthly aging and they will send reminder letters to customers who are 30 days past due. Invoices
are identified by three categories: 30 to 60 days, 90 days, and over 90 days.
Customer payments are received in a lock box. The lock box is linked with Bank of America. One cash
receivable clerks downloads the report from Bank of America. On a weekly basis, a cash receipts
clerk posts the lock box payments to the OneSource system by customer. There is a report
generated from OneSource which is called the payment report. The accounting clerk posts the
payment report to the general ledger. When the payments don't match, the two seniors check over
each other's work for any discrepancies. Cash is debited and A/R is credited. If there are any
payments which cannot be applied to a customer account they will fall out into a suspense account
and will be researchedOn monthly basis, there is reconciliation between the OneSource sub ledger
and the general ledger. Any discrepancies are reviewed.
There is also a monthly cash reconciliation to ensure that all cash has been properly accounted for.
Also, write-offs take place after three months. Last year, 320,000 write-offs were recorded.
There is also a monthly inventory report generated by the warehouse. This report is reconciled to
the inventory numbers in the general ledger.