3 the organization should be so structured that the

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3. The organization should be so structured that the perpetration of a fraud requires collusion between two or more individuals.
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Segregation of Functions Sales Order Processing credit authorization separate from SO processing inventory control separate from warehouse accounts receivable sub-ledger separate from general ledger control account Cash Receipts Processing cash receipts separate from accounting records accounts receivable sub-ledger separate from general ledger
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Supervision Supervision of employees serves as a deterrent to dishonest acts and is particularly important in the mailroom .
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Accounting Records With a properly maintained audit trail, it is possible to track transactions through the systems and to find where and when errors were made: pre-numbered source documents special journals subsidiary ledgers general ledger files
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Access Controls Access to assets and information (accounting records) should be limited. Within the revenue cycle, the assets to protect are cash and inventories and access to records such as the accounts receivable subsidiary ledger and cash journal should be restricted.
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Independent Verification Physical procedures as well as recordkeeping should be independently reviewed at various points in the system to check for accuracy and completeness : shipping verifies the goods sent from the warehouse are correct in type and quantity warehouse reconciles the stock release document (picking slip) and packing slip billing reconciles the shipping notice with the sales invoice general ledger reconciles journal vouchers from billing, inventory control, cash receipts, and accounts receivable
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Automating the Revenue Cycle Authorizations and data access can be performed through computer screens. There is a decrease in the amount of paper. The manual journals and ledgers are changed to disk or tape transaction and master files. Input is still typically from a hard copy document and goes through one or more computerized processes. Processes store data in electronic files (the tape or disk) or prepare data in the form of a hardcopy report.
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Automating the Revenue Cycle Revenue cycle programs can include: formatted screens for collecting data edit checks on the data entered instructions for processing and storing the data security procedures (passwords or user IDs) steps for generating and displaying output To understand files, you must consider the record design and layout.
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