Andy is a junior accounts clerk. Andy has the responsibility of keying transactions into the accounting information system. Andy also has the authorization and sanctions to post those journal entries into the ledger.
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Andy is a junior accounts clerk. Andy has the responsibility of keying transactions into the
Required:
Identify the risk(s) in the situation and assess what and how controls can be deployed to this situation.
Step by step
Solved in 2 steps
- Internal controls do each of the following except: A. Evaluate performance of employees B. Guarantee the accuracy if account records C. Protect assets D. Increase the likelihood that any errors will be caughtWhich of the following is an example of detective controls? a. The company should establish formal guidelines to handle cash receipts and make purchases. b. Important documents should be kept in a safe place, and electronic files should be backed up regularly. c. Employees should be made aware of the company’s internal control policies. d. Management periodically determines whether the amount of physical assets agree with the accounting records.Select the appropriate control activities for each of the following definitions. Definitions Control Activities a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical b. assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure C. they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against d. their expected performance. Authorizing transactions, recording transactions, and maintaining control of the е. related assets should be separated among employees. To prevent improper use of the company's resources, only certain employees are allowed to carry out certain business activities.
- The impact of weak internal controls can affect an employee’s fraud behavior. The role of information technology (IT) controls facilitate and help detect fraud. Design a method from the accounting information system (AIS) readings to help eliminate such employee fraud activity. Chapter 3 in your textbook discusses the need for a code of ethics and internal controls.The best way to enact a broad fraud prevention program is toa. Install airtight control systems of checks and supervision.b. Name an “ethics officer” who is responsible for receiving and acting on fraud tips.c. Place dedicated hotline telephones on walls around the workplace with direct communication to the company ethics officer.d. Practice management “of the people and for the people” to help them share personal and professional problems.Which of the following describes preventive controls? (Several choices may be correct.) Expected to be 100% effective. O Easily verified as to whether the control has worked. O Designed to stop misstatement from occurring. O Applied to each transaction prior to entering transactions into the accounting system. Applied to each transaction after transactions have been processed. O Designed to detect fraud or errors that have occurred.
- Segregation of Duties (SOD) is a basic building block of sustainable risk management and internal controls for a business. Which of the following statements is not a segregation of duties violation?A. The duties of Internal IT Developer of company is to write application programs and then perform required program maintenance when a problem occurs.B. The payroll administrator is distributing payroll checks to employees and recording cash receipts in the journal under supervision.C. The accounting clerk who recording cash receipts in the journal in the general ledger performs bank reconciliation to compare if there are any differences between cash transactions.D. The inventory warehouse clerk task is to maintain the inventory records with custody of physical assets inventory to manage asset identification, location and condition Explain why you choose your answer, and not the other (in max 200 words)Write a one-page memo analyzing the relationship between fraud and internal controls. Explain the principles underlying these approaches. Include a note on the limitations of internal controls.When planning the audit of internal controls for an issuer, the audit team shoulda. Identify significant accounts, locations, and assertions.b. Conduct a walkthrough of the internal control process.c. Make inquiries of employees regarding the existence of control activities.d. Reperform control activities performed by client employees to determine theireffectiveness.
- 1) Why is Responsibility Accounting necessary and how is it implemented? 2) Determination of control risk in the HR cycle (personnel) include an example of the explanation you gave? 3) To design an audit program for testing controls, what stages must the auditor go through when auditing a banking service company?Below are several statements about internal controls.1. The components of internal control are built on the foundation of the ethical tone set by top management.2. Once every three months, managers need to review operations to ensure that control procedures work effectively.3. Collusion refers to the act of a single individual circumventing internal control procedures.4. Detective control procedures are designed to detect errors or fraud that have already occurred, while preventive control procedures are designed to keep errors or fraud from occurring in the first place.5. Fraud committed by top-level employees is more difficult to detect because those employees more often have the ability to override internal control features.6. A good example of separation of duties would be having one person collect cash from customers and account for it, while having another person order inventory and maintain control over it.7. Employee tips historically have been the most common means of…For each of the following, give two examples of physical control that the client can use to protect the asset or the record:1. Small Tools Inventory2. Blank Checks or checkbooks3. Previous years transaction, accounting records and documents