Homework 6 - Homework 6 3b Describe any organizational...

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Homework 6 3b. Describe any organizational changes that would improve internal control. Currently the accounts receivable clerk reports to the credit manager. The AR clerk should report to the controller, because the credit manager may encourage the clerk to write-off bad debts. The credit manager reports to the sales manager, even though they have different goals. The role of the credit manager to screen customers and approve credit limits based on credit worthiness. The sales manager’s objective is to grow overall sales. The credit manager could be influenced by the sales manager to approve customers without regards to credit worthiness in efforts to grow sales. The credit manager should report to the either the treasurer or to the president.
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Unformatted text preview: The inventory clerk has complete control over the master inventory records and reports to the production foreman. The foreman may encourage the inventory clerk to misstate inventory due to shortage or damage from production. The foreman should not have oversight over inventory due to conflict of interest. The purchasing clerk reports to the production superintendent. This is a conflict of interest because the production superintendent could pressure the purchasing clerk to purchase unnecessary material or different materials than those required to meet budget. The purchasing clerk should report to the controller....
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