A.Prepare a letter to Mr Bold containing your recommendations for good internal control procedures for: (i) Cheque payments (ii) Petty cash (b) Discuss the audit implications, if any, of the unwillingness of Mr Bold to participate in the cheque signing procedures and petty cash function.
Mr A Bold has recently acquired the controlling interest in Quicksand Co, which is an
importer of sportswear. In his review of the organisational structure of the company Mr
Bold became aware of weaknesses in the procedures for the signing of cheques and the
operation of the petty cash system. Mr Bold engages you as the company's auditor and
requests that you review the controls over cheque payments and petty cash. He does not
wish to be a cheque signatory himself because he feels that such a procedure is an
inefficient use of his time. In addition to Mr Bold, who is the managing director, the
company employs 20 personnel including four other directors, and approximately 300
cheques are drawn each month. The petty cash account normally has a working balance
of about $300, and $600 is expended from the fund each month. Mr Bold has again
indicated that he is unwilling to participate in any internal control procedures which would
ensure the efficient operation of the petty cash fund.
A.Prepare a letter to Mr Bold containing your recommendations for good internal control
procedures for:
(i) Cheque payments
(ii) Petty cash
(b) Discuss the audit implications, if any, of the unwillingness of Mr Bold to participate in
the cheque signing procedures and petty cash function.
Step by step
Solved in 3 steps
