Case Analysis : Cash Could Be Stolen For Sales Invoices And The Items Sold / Shipped

1047 Words Mar 16th, 2016 5 Pages
1-b The quantity, dates, customer name, and description of items on the bill of lading should match the sales invoices and the items sold/shipped. There should be initials of the employees amongst this documentation confirming these checks. If there are differences found during these comparisons, this may mean that the sale was billed/shipped incorrectly. Inventory, COGS, Accounts Receivable (AR), or sales could potentially be wrong when the quantity on the sales invoice does not match the quantity on the bill of lading. If initials are missing this shows a weakness in these controls. If signatures are there but the quantities are still wrong, this could be a control error or fraud.
1-c The actual cash received, according to the remittance list, should match the invoices. Customer/employee initials next to amount of payment on the invoice would be a good control procedure. This process should also account for any potential discounts given/taken. The potential problem with this scenario is that cash could be stolen. Lapping fraud may be present if this happens. This means cash that was paid to cover outstanding debt is stolen instead. This account is later “paid off” using new incoming cash and this process is then repeated over and over again. This is done to try to hide the initial stolen cash and make it difficult to trace. This will cause incorrect amounts to be recorded in specific receivable accounts. This will also effect the average age of AR.
1-d Cash discounts…

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