1.
Introduction:
Internal Control: Internal control includes all the policies and plans created by the company to safeguard its assets and promote operational efficiency. Internal controls are necessary for the long-term survival and growth of the company.
To identify: The missing internal control characteristic in the given situations.
2.
Introduction:
Internal Control: Internal control includes all the policies and plans created by the company to safeguard its assets and promote operational efficiency. Internal controls are necessary for the long-term survival and growth of the company.
To identify: The possible problem caused by internal control weakness in each situation.
3.
Introduction:
Internal Control: Internal control includes all the policies and plans created by the company to safeguard its assets and promote operational efficiency. Internal controls are necessary for the long-term survival and growth of the company.
To propose: The solution for the internal control weakness in each situation.
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MYLAB (24 MONTHS) (FIN)
- Assume that management is gathering evidence as part of its process for assessing the effectiveness of internal control over financial reporting. The company is a manufacturer of high-dollar specialized Control Tested machines used in the medical profession. The following table identifies important controls that management is testing regarding accounts related to revenue recognition, accounts receivable, and other sales related activities. The first column describes the control, and the second column describes the test results. Based on the test results, determine the conclusion that management should likely make about the deficiency. (Is it a control deficiency, a significant deficiency, or a material weakness?)arrow_forward1. A new systems development project is being planned for Reindeer Christmas Supplies Company. The invoicing, cash receipts, and accounts payable modules are all going to be updated. The controller, Kris K. Ringle, is a little anxious about this project. The last systems development project that affected his department was not very successful, and the employees in the accounting department did not accept the new system very well at first. He feels that the systems personnel did not interact sufficiently with the users of the systems in the accounting department. Prepare a memo from Ringle to the head of the information systems department, Sandy Klaus. In this memo, provide some suggestions for including the accounting personnel in the systems development project. Give persuasive arguments as to why prototyping would be helpful to the workers in the accounting department.arrow_forwardThe kickback is a form of fraud often associated with purchasing. Most organizations expect their purchasing agents to select the vendor that provides the best products at the lowest price. To influence the purchasing agent in his or her decision, vendors may grant the agent financial favors (cash, presents, football tickets, and so on). This activity can result in ordersbeing placed with vendors that supply inferior products or charge excessive prices.Required;i) Describe two preventive controls that an organization can employ to deal withkickbacks fraud ii) Describe two detective controls that an organization can employ to deal with kickbacksfraud iii) Describe two corrective controls that an organization can employ to deal with kickbacks fraudarrow_forward
- The company XYZ suffers from numerous weaknesses in its internal control system. For each the below situations, you are required to identify the anomaly/risk related to this system and propose eventual solutions. The financial department issues one copy of the sales bill that is shipped to the customer with the company The inventory custodian is the person who deliver the merchandise to the The person who keep the checks (issued and received) is the same who have access to the company accounting system. A has now 9 years experience in the company. He is responsible to keep cash and checks. Since he joining XYZ , he has not claim any vacation. The financial manager prepares the checks for the company suppliers and receive the merchandises ordered by the The company XYZ has recently installed an ERP system to manage all its activities . Different staff have access to this system. Mr X is working…arrow_forwardIn the scenario, where employer has been putting more emphasis on controlling costs for the various businesses. With the slowing of overall spending in one sector, while ordering managers to closely monitor expenses, selling several companies and giving vice presidents greater responsibility for statements of financial positions. Whatpositive and negative consequences might this pose to the company in future fraud prevention? Outline at least three of each type.arrow_forwardIdentify the fraud triangle risk factor (Opportunity, Pressure, or Rationalization) in each situation. 1. The business has no cameras or security devices at its warehouse. 2. A worker sees other employees regularly take inventory for personal use. 3. Payroll manager feels she is greatly underpaid. 4. No one matches the cash in the register to receipts when shifts end. 5. Managers are expected to grow business or be fired. 6. Managers are told to make extreme cuts in expenses. Opportunity Rationalization Pressure Opportunity Pressure Pressurearrow_forward
- You will have the opportunity in this discussion to recommend adequate internal controls over sales invoices and receivables. If controls are not in place over these functions, companies are susceptible to errors, fraud, and losses. In the following scenarios, recommend internal controls that need to be in place to eliminate the problems described: An inexperienced clerk does not have the knowledge to prepare sales invoices properly. They are confused about the actual items shipped. As a result, the clerk has been preparing invoices at prices below the company's sales prices. During your audit, the controller approaches you about a problem with missing invoices. They think that these missing invoices were never recorded in the system, which results in the accompanying receivables not being recorded either. They read the monthly sales data and calculates that the company has faced significant losses as a result.arrow_forwardThe CEO of the Baker Inc, wants to implement a new accounting system, to improve work flow through the company’s sales, cash receipts, accounts payable, and cash disbursement procedures. The CEO is, however, concerned about the potential disruption that the implementation will have on operations. In an announcement letter to Baker’s employees, the CEO stated that: “I have contracted Flybynight Consulting Group to do the needs analysis, system selection, and design work. The programming and implementation will be performed in-house using existing IT department staff. The development process will be unobtrusive to user departments because Flybynight knows what needs to be done. They will work independently, in the background, and will not disrupt departmental and internal audit work flow with time consuming interviews, surveys, and questionnaires. This promises to be an efficient process that will produce a system that will be appreciated by all users.” Required: Draft a memo from George…arrow_forwardA new systems development project is being planned for Reindeer Christmas Supplies Company. The invoicing, cash receipts, and accounts payable modules are all going to be updated. The controller, Kris K. Ringle, is a little anxious about this project. The last systems development project that affected his department was not very successful, and the employees in the accounting department did not accept the new system very well at first. He feels that the systems personnel did not interact sufficiently with the users of the systems in the accounting department.Prepare a memo from Ringle to the head of the information systems department, Sandy Klaus. In this memo, provide some suggestions for including the accounting personnel in the systems development project. Give persuasive arguments as to why prototyping would be helpful to the workers in the accounting department.arrow_forward
- Systems Planning A new systems development project is being planned for the Reindeer Christmas Supplies Company. The invoicing, cash receipts, and accounts payable modules are all going to be updated. The controller, Kris K. Ringle, is a little anxious about this project. The last systems development project that affected his department was not very successful,and the employees in the accounting department did not accept the new system very well at first. He feels that the systems personnel did not interact sufficiently with the users of the systems in the accounting department. Prepare a memo from Ringle to the head of the information systems department, Sandy Klaus. In this memo, provide some suggestions for including the accounting personnel in the systems development project. Give some very persuasive arguments why prototyping would be helpful to the workers in the accounting department.arrow_forwardAssume you are considering an entity’s internal controls over credit sales and cash collection. System documentation was accomplished through a questionnaire and written narratives and, in conjunction with a transaction walk-through, revealed the following potential weaknesses in internal control, some of which, depending on their severity, could prompt you to set control risk at the maximum. a. New customers are not approved before ordered good are shipped. b. Sales prices vary from customer to custom. c. No approval is required for returned goods from customers. d. Subsidiary accounts receivable records do not always agree with the general ledger control account. e. Blank checks are left unprotected in an unlocked safe. Required: For each potential weakness, indicate a control or controls that management could implement to reduce the likelihood of errors or frauds. Case 4 (Adapted) During your audit of Grace Company’s December 31, 2013 financial…arrow_forwardaudit please quickly i will give you a thumb!!!arrow_forward
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