Hall Cases Essay

INTERNAL CONTROL CASES1. Solution Smiths Marketa), b) agree diagrams on the pursuit pages.c) Internal look Weaknesses1) gateway to the cash drawers by gross revenue salesclerks requires more accountability. Each drawer is chafeed by various clerks throughout the day and cash may be withdrawn by any of them.2) The immanent cash register put down should be used as a tally to determine how oft cash (including checks, and reference book card vouchers) should be in the register drawer.3) The shift key supervisor does non sign for the specific amount of cash get 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 diary and General Ledger. d)2.Solution to Spice is Righta), b), See diagrams on the following pages.c) Internal chair Weaknesses1) No credit check2) Inventory run function is performed by w arhouse clerk.3) Accounting de classifyment bills customer, updates the AR account, and recordssales in the Sales Journal thus reducing the opportunity to feel discrepancies between total sales and AR postings.4) Customer is billed maestroly order is actually shipped5) Remittance List should be prepargond in the mail direction6) No journal voucher prep atomic number 18d by cash service clerk.7) Cash receipts clerk does not prepare a accommodate slip.d) IT Controls for Basic Technology duste) Flowchart of revised system school-age child responses will diverge for this part of the assignment. The following issues, however, need to be addressed. advertize stand-alone computers to a networked environmentThe internal control problems already cover that need to be corrected in the new system.3. Solution to ABE plumbinga), b) See diagrams on the following pages.c) Internal Control Weaknesses1) No ascribe check is performed.2) The sales clerk closes the open sales order causat ion the sale to be recorded before the goods are actually shipped. 3) The warehouse clerk has asset custody and should not also update the document records. 4)The shipping clerk does not reconcile the stock release with the original order. This allows for the wrong items and or quantities to be shipped. 5) Customer is billed before the goods are shipped. Billing should be triggered by shipping notice. Instead, the customer invoice is printed fromthe closed sales order, which was prepared before the goods were shipped.d) Flowchart of revised system school-age child 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 Walker Booksa), b), See diagrams on the following pages.c) Internal Control WeaknessesSales Processing1) The credit check is performed by the sal es articulation2) The sales department should not be maintain the sales journal3) The warehouse should not be updating stock certificate subsidiary daybookCash Receipts4) Mail room workers have entrance to twain check and remitment advices. This situation require a reduced tangle 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 remittance 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 Shipping 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 label network access controls (passwords, access privileges) to ensure a proper requisition 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. Sol ution to Bait n bobbina, 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 shop assistant should not update the general ledger.4) Billing and AR are combined. This bodily structure will mask discrepancies between what was billed and what was recorded as a sale. 5) Supervision is needed 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