What are the control weaknesses you noted? b. What are the possible risks that can happen due to the said control weaknesses?
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The smallest branch of Super Fresh Cosmetics in Iloilo City employs Mary Santos, the branch manager, and her sales assistant, Jane Reyes. The branch uses as bank account in Iloilo City to pay expenses. The account is kept in the name of "Super Fresh Cosmetics Special Account". To pay expenses, checks must be signed by Mary Santos or by the treasurer of Super Fresh Cosmetics, Juan Dy. Mary receives the cancelled checks and bank statements. She reconciles the branch account herself and files cancelled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office.
a. What are the control weaknesses you noted?
b. What are the possible risks that can happen due to the said control weaknesses?
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- The smallest branch of Super Fresh Cosmetics in Iloilo City employs Mary Santos, the branch manager, and her sales assistant, Jane Reyes. The branch uses as bank account in Iloilo City to pay expenses. The account is kept in the name of "Super Fresh Cosmetics Special Account". To pay expenses, checks must be signed by Mary Santos or by the treasurer of Super Fresh Cosmetics, Juan Dy. Mary receives the cancelled checks and bank statements. She reconciles the branch account herself and files cancelled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office. a. What are the control weaknesses you noted? b. Give internal control activities to prevent/detect/correct the said weaknesses.Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the recordkeeper, receives a copy of the list and posts payments to patients' accounts. About once a month the office clerks have an expensive lunch they pay for as follows. First, Patton endorses a patient's check-in Dr. Conrad's name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer's account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money. 1. Who is the best person in Dr. Conrad's…A small branch of Avon Cosmetics in Tuao, employs Amelia Rodriquez as Branch Manager and Mary Gonzales as her sales assistant. The Branch uses a bank account in Tuao, to pay for expenses in the name of Avon Cosmetics-Special Account. To pay expenses, checks must be signed by Amelia Rodriquez or John Dee, the treasurer of Avon Cosmetics. Amelia receives the cancelled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office in Makati. Required: Identify the weakness /weaknesses in internal control and opposite the identified weakness/weaknesses, enumerate the control procedures that you will recommend to avoid or mitigate the risk of loss.
- Harriet Knox, Ralph Patton, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Knox opens the mail and prepares a triplicate list of money received. She sends one copy of the list to Patton, the cashier, who deposits the receipts daily in the bank. Diamond, the recordkeeper, receives a copy of the list and posts payments to patients’ accounts. About once a month the office clerks have an expensive lunch they pay for as follows. First, Patton endorses a patient’s check in Dr. Conrad’s name and cashes it at the bank. Knox then destroys the remittance advice accompanying the check. Finally, Diamond posts payment to the customer’s account as a miscellaneous credit. The three justify their actions by their relatively low pay and knowledge that Dr. Conrad will likely never miss the money. Required 1. Who is the best person in Dr.…ACC Snake Creek Company has one trusted employee who, as the owner said, handles all of the book-keeping and paperwork for the company. This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing checks for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owners asked the local bank for a $ 20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor ( a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: a. Cash sales sometimes were not entered in the cash register, and the trusted employee pocketed approximately $ 50 per month. b. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious…Southern Company pays its employees weekly by issuing checks on its regular bank account. The owner thinks it would be too much trouble to have a second checking account. Explain to the owner why having this account might be worth the additional effort.
- Steve Ramos owns apartment buildings in Baguio City, and Tagaytay City. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in the local newspaper. The property managers transfer cash to Ramos monthly and prepare their own bank reconciliations. The manager in Baguio City has been stealing large sums of money. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the balance sheet reports more cash than Ramos actually has in the bank. In negotiating the sale of the Baguio City property, Ramos is showing the balance sheet to prospective investors. Based on Case 3, identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed?Steve Ramos owns apartment buildings in Baguio City, and Tagaytay City. Each property has a manager who collects rent, arranges for repairs, and runs advertisements in the local newspaper. The property managers transfer cash to Ramos monthly and prepare their own bank reconciliations. The manager in Baguio City has been stealing large sums of money. To cover the theft, he understates the amount of the outstanding checks on the monthly bank reconciliation. As a result, each monthly bank reconciliation appears to balance. However, the balance sheet reports more cash than Ramos actually has in the bank. In negotiating the sale of the Baguio City property, Ramos is showing the balance sheet to prospective investors. 1. Identify two parties other than Ramos who can be harmed by this theft. In what ways can they be harmed? 2. Discuss the role accounting plays in this situation.Able, an accounts payable supervisor for ABC Company, bought supplies for a company he owned on the side. Able entered vouchers in ABC Company’s accounts payable system for the cost of the supplies. Checks were cut to pay for these unauthorized expenses during normal daily check runs. The goods ordered were drop-shipped to a location where Able could collect them. This is an example of: a. An expense reimbursement scheme b. A commission scheme c. A billing scheme d. An invoice kickback scheme
- Startup is a very small business. Ethel, the accountant, does all the accounting, answers the phone and does the daily bank deposit in addition to working the sales desk. A cost effective way for Startup's owner to strengthen internal controls is to Multiple Choice separate the recording and custody function by asking Ethel to list cash receipts as she opens the mall, before preparing the bank deposit hire another accountant to check Ethel's work None of the other alternatives are correct open and review the mail him/herself O segregate duties by insisting that Ethel not update accounts receivable records on the days she makes bank depositsSnake Creek Company has a trusted employee who, as the owner said, “handles all of the bookkeeping and paperwork for the company.” This employee is responsible for counting, verifying, and recording cash receipts and payments, making the weekly bank deposit, preparing cheques for major expenditures (signed by the owner), making small expenditures from the cash register for daily expenses, and collecting accounts receivable. The owner asked the local bank for a $20,000 loan. The bank asked that an audit be performed covering the year just ended. The independent auditor (a local CPA), in a private conference with the owner, presented some evidence of the following activities of the trusted employee during the past year: Cash sales sometimes were not entered in the cash register and the trusted employee pocketed approximately $50 per month. Cash taken from the cash register (and pocketed by the trusted employee) was replaced with expense memos with fictitious signatures (approximately…The following information describes part of the cash collection procedure at Ritaj Sdn. Bhd. It is a small company which processes its daily transactions Every day, for the cash collection procedure, a clerk in the Accounts Receivable Department will review the Account Receivable (AR) subsidiary ledger for the payments that are due to be received. He then prepares a cash collection letter and sends it to the cash collection department to check the outstanding amount owed by its customers from credit sales to the firm. Upon receiving the document from the account receivable department, the cash collection clerk determines the volume of credit sales and the average collection period. Both of these factors have direct relationship with the firm’s credit and collection policies. Since accounts receivable is an important link in working capital management, the establishment and implementation of these policies will have direct impact on the firm’s operation and profitability as a whole.…
