Week 8 Assignment-Internal Control and Bank Reconciliations

Week 8 Assignment-Internal Control and Bank Reconciliations...

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PROBLEM SET A Problem 8-1A Analyzing internal control C1 For each of these five separate cases, identify the principle of internal control that is violated. Recommend what the business should do to ensure adherence to principles of internal control. 1. Heather Flatt records all incoming customer cash receipts for her employer and posts the customer payments to their respective accounts. The internal controls that are violated are separate recordkeeping from custody of assets and divide responsibility of related transactions. I would have someone else handle the actual cash and list those payments on a paper receipt and balance the cash at the end of the day, then I would have someone else make the bank deposit according to the receipts and then have heather do the posting to the general ledger. 2. At Netco Company, Jeff and Jose alternate lunch hours. Jeff is the petty cash custodian, but if someone needs petty cash when he is at lunch, Jose fills in as custodian. I would think having both Jeff and Jose acting as custodians of the petty cash violate the separation of duties and establishing responsibility. With both of them able access the cash in petty cash can cause a problem if money is taken and not accounted for, you would not know who to blame for the discrepancy. I would have only one of them responsible for issuing cash from the fund and let those who need funds from petty cash to come back when that person is back from lunch or if the custodian of the fund is in the building I would page or get him to come and disburse the funds. 3. Nadine Cox posts all patient charges and payments at the P-Town Medical Clinic. Each night Nadine backs up the computerized accounting system to a tape and stores the tape in a locked file at her desk. Here again separation of recordkeeping and assets and dividing responsibility is being violated. I may have Nadine post all charges and payments but I would not have her do the daily bank deposit and I would have someone else be responsible for backing up the accounting system. I think they are also violating a key part of insuring assets and applying technology. I would have the system backed up on several tapes and have one left in a safe onsite and the other placed offsite in a safety deposit box or some other safe place because that tape
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This note was uploaded on 09/06/2010 for the course ACC 225 acc 225 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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Week 8 Assignment-Internal Control and Bank Reconciliations...

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