Professional Documents
Culture Documents
Timing difference between when cash Make two deposits for each day’s receipts.
is received and when deposited in the
bank An employee who does not handle cash
- Cash is received after the day’s bank receipts daily reconciles each day’s cash
deposit is prepared and sent to the receipts per book with deposits per bank
bank.
- Bank credits bank deposits received
after a certain hour on the next day. List cash received each day; compare it to
daily cash deposits.
Cash receipts are being stolen
Have 2 people involved in cash receipts if
practical. If only one can be involved,
video tape the receipts process.
1
Occasional discrepancies between Limit physical and logical access to the
physical inventory counts and inventory records to authorized employees.
perpetual inventory records.
Require that all adjustments to inventory
Unauthorized access to physical records be approved by a responsible
inventory and/or inventory records. official.
2
Fraud Examine physical inventory counts and
perpetual inventory records for evidence of
fraud
Question 2
Answer:
1) control activities
2) monitoring
3) control environment
4) risk assessment
5) information and communication
Question 3
Answer:
1. Internal environment – tone of an organization (tone at the top President, CEO)
2. Objective setting – set objectives, chose objectives support and align with entity’s
mission (follows a top-down model for planning)
3. Event identification – identify internal and external events, which affecting achievement
of objectives (The firm does not use data encryption (加密) in the wireless network);
opportunities are channeled back to management’s strategy or objective-setting
processes
4. Risk response – avoid, accept, reduce, share risk (accept the risk of stock price
decreases); align risks with entity’s risk tolerance and risk appetite
5. Control activities – policies and procedures established and implemented (hold key
employees responsible); risk response effectively carried out
3
Question 4
Answer
1) Up-to-date credit records must be maintained to control this problem. During the
credit approval process, the credit manager should review the accounts receivable aging
schedule to identify customer’s with past-due balances to prevent additional sales to those
customers. Alternatively, the computer system could be programmed to determine if the
customer had any past due balances over a specified length of time (such as 60 days). If
not, the sale would be approved. If they had a past-due balance, a notice could be sent
to the credit manager who could review the sale and make a decision about extending
additional credit.
2) The problem usually occurs because the same individual writes off accounts and
processes cash payments. Therefore, the best control procedure to prevent this problem is
to separate the function of authorizing write-offs of uncollectible accounts from the
function of handling collections on account.
3) The system should be configured to match shipping information to sales orders and
alert the shipping employees of any discrepancies.
If accounts receivable updates the records based on a cash receipts pre-list instead of the
actual checks, the mailroom clerk could conceivably lap payments. To prevent this, the
cash receipts pre-list could be compared to the checks before the list is sent to accounts
receivable. The checks should not be sent to accounts receivable as the accounts
receivable clerk could perform the lapping.
4
5) Data: Regular backups with copies being stored off-site.
Hardware and software: Hot or cold site arrangements for both
Recovery: Disaster recovery plan developed, tested, and in place