ble, an accounts payable supervisor for ABC Company, bought supplies for a company he owned on the side. Able entered vouchers in ABC Company’s accounts payable system for the cost of the supplies. Checks were cut to pay for these unauthorized expenses during normal daily check runs. The goods ordered were drop-shipped to a location where Able could collect them. This is an example
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Able, an accounts payable supervisor for ABC Company, bought supplies for a company he owned on the side. Able entered vouchers in ABC Company’s accounts payable system for the cost of the supplies. Checks were cut to pay for these unauthorized expenses during normal daily check runs. The goods ordered were drop-shipped to a location where Able could collect them. This is an example of:
a. An expense reimbursement scheme
b. A commission scheme
c. A billing scheme
d. An invoice kickback scheme
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- Read and analyze each of the transactions and explain whether they are considered improper segregation of functions? Explain your answer. ed from ro rata hich person The billing department prepares the customers' invoices and records the sale in the sales journal. a. b. Mailroom clerk open cash receipts envelopes from customers and also prepares the remittance list. ses Accounting clerk receives journal vouchers from various departments and post to the GL accounts. ensation C. does and 00.00 d. The sales department approves sales credit memos as the result of product returns and forwards these to the AR department, which adjusts the customer accounts to reflect the return. II1. SEGREGATION OF FUNCTIONS to the AR department, which adjusts the customer Which, if any, of the following situations represents improper segregation of functions? Explain your accounts to reflect the return. answer. a. The billing department prepares the customers' invoices and records the sale in the sales journal. b. Mail room clerk opens cash receipts envelopes from customers and also prepares the remittance list. c. Accounting clerk receives journal vouchers from various departments and also posts to the GL accounts. d. The sales department approves sales credit memos as the result of product returns and forwards theseAt Reyes Company, checks are not prenumbered because both the purchasing and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in a unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods hae been received and verifies the mathematical accuracy of the vendor’s invoice. After payment, the invoice is filed by vendor and the purchasing agent records the payment in the cash disbursement journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “Paid”, files them by paymet date, and records the checks in the cash disbursement journal. Reyes Company maintains one checking account that is reconciled by the Treasurer. Requirements: List the weaknesses in internal conrtrol over cash disbursements. Identity improvements for correcting these weaknesses.
- You are the auditor for Konerko’s Office Supply Store, which is opening for business next week. The store owner has established all the controls you have recommended for ensuring that sales are recorded properly and cash is accounted for. The owner has heard from other small business owners that employees often used returned goods as means of skimming money from the register.Required:a. How might an employee use returned goods to skim money from the register?b. What controls would you recommend to prevent or detect fraudulent returns?c. What audit procedures might you perform to detect fraudulent returns?At Martinez Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice. After payment, the invoice is filed by vendor name and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “paid,” files them by payment date, and records the checks in the cash disbursements journal. Martinez Company maintains one checking account that is reconciled by the treasurer. List the weaknesses in internal control over cash disbursements.At Reyes Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor’s invoice. After payment, the invoice is filed by vendor and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “paid,” files them by payment date, and records the checks in the cash disbursements journal. Reyes Company maintains one checking account that is reconciled by the treasurer. Instructions (a) List the weaknesses in internal control over cash disbursements. (b) Identify improvements for correcting these…
- Allison Everhart, an employee in accounts payable, believes she can run a fictitious invoice through the accounts payable system and collect the money. She knows payments are subject to an audit. Which account would be the best place to hide the fraud?a. Inventory.b. Wage expense.c. Consulting service expense.d. Property tax expense.Determine whether each cash receipts procedure is an internal control strength or weakness. 1. If a salesclerk makes an error in recording a cash sale, she can access the register’s electronic record to correct the transaction. 2. All sales transactions, even those for less than $1, are recorded on a cash register. 3. Two employees are tasked with opening mail that contains cash receipts. 4. One of the two employees tasked with opening mail is also the recordkeeper for the business. 5. The supervisor has access to both cash and the accounting records. 6. Receipts are given to customers only for sales that are above $20.The sales department receives the unstandardised sales order since customer orders are mailed, e-mailed or faxed to the sales department. The sales clerk first converts the unstandardised sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Three years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk is using the same procedure to check the creditworthiness of the new customers.The customer’s order is rejected if the customer’s credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised…
- The following procedures were recently installed by Raspberry Creek Company:a. After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing.b. The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer’s office for approval.c. Along with petty cash expense receipts for postage, office supplies, etc., several postdated employee checks are in the petty cash fund.d. At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers.e. At the end of each day, all cash receipts are placed in the bank’s night depository.f. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit…The sales department receives the unstandardised sales order since customer orders are mailed, e-mailed or faxed to the sales department. The sales clerk first converts the unstandardised sales order into the standardised sales order. For this purpose, the sales representative requests the missing information, if any. When the order is received, the sales clerk checks the customer’s creditworthiness of the customer from his computer terminal. Three years ago, the sales clerk requested the accounting department to provide him with a list of customers whose account receivables are written off. The sales clerk is still using this information to check the creditworthiness of the customers. The sales clerk is using the same procedure to check the creditworthiness of the new customers.The customer’s order is rejected if the customer’s credit is not verified. The sales order processing is started after the credit verification. In particular, the sales clerk records the approved standardised…Able, a salesman, “borrowed” a stack of blank receipts from a friend who was a waiter at a local restaurant.Able filled in the blank receipts to make it appear that he had been entertaining clients at business lunches. Hesubmitted the receipts to his manager and was reimbursed for the total amount. This scheme can bestbe characterized as: A. A fictitious expense schemeB. A kickback schemeC. A false billing schemeD. A mischaracterized expense scheme
