aCCOUNTING WEEK 4...4 - 1 Internal Cash Control Internal...

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1 Internal Cash Control Internal Cash Control Gregory Mann Axia College of University of Phoenix Acc 220
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2 Internal Cash Control While there are many opportunities of weakness in internal controls over cash disbursements if a company has not established policies for their employees, Idaho Company has some obvious weaknesses present in their operations. One of the weaknesses of the relationship between the treasurer and the purchasing agent is there is not a clear or defined separation of duties. Maintaining strict and distinct separation of duties between departments will assist in preventing fraud and theft in the company. The treasurer and the purchasing agent have the authority to issue checks and also have unlimited access to unissued checks that are kept, unlocked in a file cabinet. This is a weakness in internal controls because giving access to the company’s checking account, or assets can lead to instances of fraud and theft. The company also makes an error in keeping the unissued checks unlocked in a cabinet for anyone to access. At Idaho Company the purchasing agent is responsible for the payment of the bills and invoices of the goods that are received and purchased for resale. Allowing an individual this power is also a weakness because the purchasing agent also verifies the accuracy of the invoices and is the person responsible for receiving and checking in the goods. The purchasing agent is responsible for the recording of these transactions and makes the entries in a cash disbursements journal. However, the purchasing agent is not the only individual given access to this cash disbursements journal. The treasurer also has access to the cash
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This note was uploaded on 10/21/2010 for the course ACC/220 AAAA0RWSC4 taught by Professor Barton during the Spring '10 term at University of Phoenix.

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aCCOUNTING WEEK 4...4 - 1 Internal Cash Control Internal...

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