Hall Cases Essay

INTERNAL CONTROL CASES1. beginning Smiths Marketa), b) See diagrams on the following pages.c) inwrought Control Weaknesses1) Access to the cash drawers by sales works requires more accountability. each drawer is regained by various clerks throughout the day and cash may be withdrawn by any of them.2) The internal cash register tape should be used as a pull strings to determine how much cash (including checks, and address card vouchers) should be in the register drawer.3) The shift supervisory program does not sign for the specific amount of cash received or returned at the end of the day. He simply logs the drawers in and out.4) The treasury clerk is unsupervised in the counting of cash.5) The treasury clerk has asset custody and responsibility for recording sales and cash in the daybook and familiar Ledger. d)2. consequence to change is Righta), b), See diagrams on the following pages.c) Internal Control Weaknesses1) No credit check2) stock list control function is perfor med by w atomic number 18house clerk.3) Accounting de sectionalizationment bills customer, updates the AR account, and recordssales in the sales Journal thus reducing the opportunity to detect discrepancies between total sales and AR postings.4) client is billed before order is actually shipped5) Remittance List should be busheld in the mail populate6) No journal voucher prep atomic number 18d by cash expediency clerk.7) Cash receipts clerk does not prepare a deposit slip.d) IT Controls for Basic Technology Systeme) Flowchart of revised system savant responses forget vary for this mathematical function of the assignment. The following issues, however, need to be addressed. Upgrade stand-alone computers to a networked environsThe internal control problems already covered that need to be reverse in the new system.3. Solution to ABE Plumbinga), b) See diagrams on the following pages.c) Internal Control Weaknesses1) No Credit check is performed.2) The sales clerk closes the open sales order causing the sale to be recorded before the goods are actually shipped. 3) The storage warehouse clerk has asset custody and should not also update the inventory records. 4)The transportation clerk does not reconcile the stock release with the original order. This allows for the wrong items and or quantities to be shipped. 5) node is billed before the goods are shipped. Billing should be triggered by shipping notice. Instead, the customer invoice is printed fromthe close sales order, which was prepared before the goods were shipped.d) Flowchart of revised system learner responses will vary for this part of the assignment. The following issues, however, need to be addressed. The internal control problems already covered that need to be corrected in the new system. A system configuration similar to figure 4-18 would be appropriate.4. Solution to pram Booksa), b), See diagrams on the following pages.c) Internal Control WeaknessesSales Processing1) The credit check is pe rformed by the sales representative2) The sales department should not be maintain the sales journal3) The warehouse should not be updating inventory subsidiary book of accountCash Receipts4) Mail room workers have access to twain check and remittance advices. This situation require a reduced interbreed of control and separate mail room procedures for customer payments vs routine mail.5) The accounts receivable clerk has access to both the checks and the customer accountsd)IT Controls for Basic Technology Systeme) Revised System Walker Books SystemStudent responses will vary for this part of the assignment but shouldaddress the internal control issues already covered. 5. Solution to AV Safety, Inc. a), b), d) See diagrams on the following pages.c) Internal Control Weaknesses1) No credit check is performed2) Sales journal is updated before the goods are shipped3) Warehouse clerk has access to inventory and also update the inventory ledger 4) Mailroom clerk has access to both the re mittance advice and the checks, no remittance list id prepared. 5) AR clerk has access to both the checks and the remittance advicesd) IT Controls for a Basic Technology Systeme) Student responses will vary for this part of the assignment, but should address the internal control issues identified above.6.Solution to Premier Sports Memorabiliaa), b), d) See diagrams on the following pages.c) Internal Control Weaknesses1) Transaction is recorded in Sales Journal before goods are shipped. 2) Warehouse and transportation system functions are combined. This removes control over picking and shipping the wrong products. 3) Mail room clerk should prepare a remittance list to control remittance advices and checks 4) Although not stated in the case as aproblem, the auditor should evaluate network access controls (passwords, access privileges) to ensure a proper segregation of dutiesd) IT Controlse) Student solutions to this part of the case will vary. The solution should address the control issues identified in part C.7. Solution to Bait n Reela, b, and e, see pages that followc)Internal Control Weaknesses1) The sales clerk performs the credit check this is a segregation of duties and transaction authorization problem. 2) Warehouse should not update the inventory and General ledger control accounts. 3) AR Clerk should not update the general ledger.4) Billing and AR are combined. This structure will mask discrepancies between what was billed and what was recorded as a sale. 5) Supervision is take in the mailroom because employees who open the mail have access to both cash and the remittance advice. 5) The cash receipts clerk has access to the assets (cash) and is responsible for updating the general ledger. 6) See 3 above.d)It Controls