Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Accounts Receivable Cycle
Riordan Manufacturing, an industry leader in the field of plastic injection molding, has
facilities in California, Georgia, Michigan and China. The accounting functions are carried
out in each individual location, and consolidated for processing in the corporate offices in
California. The Georgia and Michigan locations, being newly acquired, are using systems
that are not completely compatible with the corporate offices. This is causing problems on
many levels and within this paper, Learning Team A will discuss the accounts receivable
cycle as Riordan Manufacturing would like to achieve.
Learning Team A will discuss the strengths and weaknesses of the internal controls of the
accounts receivable cycle, the integration of the cycle into enterprise wide accounting
information systems and the different types of information systems that will be needed for
the integration. Finally, Team A will present a flowchart showing how the accounts
receivable information optimally flows through the company.
Strengths and Weaknesses of Internal Controls
Internal control is somewhat broad in nature, but specific enough to protect the company.
Some basic accounting controls need to be implemented to assure stockholders that the
financial records are accurate. Six control activities are necessary to a company internal
control system. These activities are a good audit trail, sound personnel policies and
practices, separation of duties, physical protection of assets, internal reviews of controls
and timely performance reports. If controls are not properly implemented, the company
could be vulnerable to theft and inaccuracies.
Two controls that are key factors in any accounting department are separation of duties and
processing controls. For example, if the same employee processes payments and processes
