AACSB Analytic AICPA BB Critical Thinking AICPA FN Risk Analysis Blooms

Aacsb analytic aicpa bb critical thinking aicpa fn

This preview shows page 20 - 22 out of 22 pages.

AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Bloom's: Application Difficulty: Medium 6- 20
Image of page 20
Chapter 06 - Employee Fraud and the Audit of Cash 104. Micro Chip Corporation (MCC) has a special PO Box for customer payments. Jane is responsible for: going to the post office every day, emptying the post office box, opening the mail, making a prelist, sending the remittance advices to accounts receivable, and sending the checks to the cashier's office. Jane has opening a business account at her bank for Master Cleaning Company (MCC). Several of Micro Chips checks are made out with only the initials MCC. Jane selects certain checks made out only with the initials MCC and deposits them in her business account. She would destroy the remittance advice. 1. Name two controls that would prevent or detect this fraud. 2. Name two audit procedures that might detect this fraud. Controls include: 1. A separate person could empty the PO Box, record how many envelops were in the box and deliver the unopened mail to Jane. Jane would be required to account for each envelop. The mail could be picked up under joint custody. The mail could be opened under joint custody. Surveillance equipment could be used to monitor the opening and recording of payments. Since customer complaints would be made because payments would not be credited to their account, and independent and vigorous complaint resolution process would be a good control. Mailing of statements each month to customers with balances or activity in their account. Follow up communication on customer accounts that are past due by someone independent of accounts receivable. 2. Procedures would include: Observe the opening of the mail and the recording of cash. Review of customer complaints for patterns and appropriate follow up by company personnel. From a sample of customer complaints, ask customers to send a copy of their payment (front and back) and review check for endorsement and bank account. Review of the aging of accounts receivable schedule (accounts where payments were diverted would begin to have past due balances). Confirm account balances with customers. Review responses to follow up communications on customer past due accounts. 6- 21
Image of page 21
Chapter 06 - Employee Fraud and the Audit of Cash AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Risk Analysis Bloom's: Application Difficulty: Hard 6- 22
Image of page 22

You've reached the end of your free preview.

Want to read all 22 pages?

  • Spring '12
  • Hong
  • employee fraud, Audit of Cash

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes