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    ar0157's Avatar
    ar0157 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Sep 2, 2013, 10:06 PM
    Internal control activities
    I have a little trouble understanding this question

    Percy Printers uses the following control procedures:
    1) Cheques are not pre-numbered because the purchasing manger must approve payments before cheques are signed,
    2) The companys accountant record the receipt of cash and cheques and makes deposit at the bank.
    3) The employee who works the register reconciles cash to receipts at the end of the day.
    4) Employees know that the internal auditor will do a bank reconciliation at the end of each month
    5) Pretty cash is kept in a back room but is not monitored during the day.
    6) A cashier lets another employee work his assigned register while he helps a customer

    Required : Identify the problem with each internal control procedure
    Fidget1's Avatar
    Fidget1 Posts: 105, Reputation: 4
    Junior Member
    		  
    #2

    Sep 3, 2013, 10:33 AM
    It's just asking you to spot weaknesses in controls. Here's an idea for the first one to help you on your way:

    1. Cheques need to be pre-numbered in sequence so that there's an audit trail of them. For example, you could see that cheques go from 1 to 8, then 10, 11, 12 etc. So what happened to number 9? You wouldn't be able to do that if they're not pre-numbered. So it's more open to fraud.
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