unordered items. Schedule additional help during busy periods. Receiving department employees inform Configure the system to compare quantities purchasing of discrepancies between received to quantities ordered. The system quantities received and ordered greater should send discrepancies exceeding a than 5%. They may fail to do this during tolerable deviation directly to the purchasing busy periods, resulting in failure to manager. timely resolve problems. The identity of employees removing The identity of employees removing inventory from the storeroom is not inventory should be recorded. This can be recorded. This makes it difficult to done either by swiping an ID badge or by investigate the cause of any discrepancies entering a user ID in an online terminal. between recorded and actual counts of inventory. Accounts payable clerks can create The system should be configured to a list supplier records without review and of all one-time suppliers. Management subsequently approve payments to those should review that list regularly. suppliers. This creates the possibility of Accounts payable should not be able to create fraudulent disbursements. any new supplier records that task should – only be done by the purchasing manager. There is no indication that supporting The system should be configured to mark documents in the voucher package are supporting documents in a voucher package marked or after being as PAID when used to generate a check or “cancelled” “paid” used to issue a check. This can result in EFT payment. duplicate payments. Checks are returned to accounts payable Checks should be mailed by the cashier or the to be mailed to suppliers. This provides cashier’s assistant. an opportunity to intercept and alter a check. The treasurer, who has the ability to write Someone than the cashier or treasurer checks and authorize EFT payments, also should reconcile the bank account statement. reconciles the bank account. This provides an opportunity to commit fraud and cover up the discrepancy by altering the reconciliation. 13.12 Inc. has hired you to review its internal controls for the purchase, receipt, storage, and issuance of raw materials. You observed the following: Raw materials, consist mainly of high-cost electronic components, are kept in a locked storeroom. Storeroom personnel include a supervisor and four clerks. All are well trained, competent, and adequately bonded. Raw materials are removed from the storeroom only upon written or oral authorization by a
unordered items. Schedule additional help during busy periods. Receiving department employees inform purchasing of discrepancies between quantities received and ordered greater than 5%. They may fail to do this during busy periods, resulting in failure to timely resolve problems. Configure the system to compare quantities received to quantities ordered. The system should send discrepancies exceeding a tolerable deviation directly to the purchasing manager. The identity of employees removing inventory from the storeroom is not recorded. This makes it difficult to investigate the cause of any discrepancies between recorded and actual counts of inventory. The identity of employees removing inventory should be recorded. This can be done either by swiping an ID badge or by entering a user ID in an online terminal. Accounts payable clerks can create supplier records without review and subsequently approve payments to those suppliers. This creates the possibility of fraudulent disbursements. The system should be configured to a list of all one-time suppliers. Management should review that list regularly. Accounts payable should not be able to create any new supplier records – that task should only be done by the purchasing manager. There is no indication that supporting documents in the voucher package are marked “cancelled” or “paid” after being used to issue a check. This can result in duplicate payments. The system should be configured to mark supporting documents in a voucher package as PAID when used to generate a check or EFT payment. Checks are returned to accounts payable to be mailed to suppliers. This provides an opportunity to intercept and alter a check. Checks should be mailed by the cashier or the cashier’s assistant. The treasurer, who has the ability to write checks and authorize EFT payments, also reconciles the bank account. This provides an opportunity to commit fraud and cover up the discrepancy by altering the reconciliation. Someone than the cashier or treasurer should reconcile the bank account statement. 13.12 Inc. has hired you to review its internal controls for the purchase, receipt, storage, and issuance of raw materials. You observed the following: Raw materials, consist mainly of high-cost electronic components, are kept in a locked storeroom. Storeroom personnel include a supervisor and four clerks. All are well trained, competent, and adequately bonded. Raw materials are removed from the storeroom only upon written or oral authorization by a
rais12_SM_CH13.docx