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    Ais Weekly Assignment

    Uploaded by

    Prince Ryan
    The document describes several internal control weaknesses: 1. Lack of segregation of duties as one person updates inventory records and has physical access to raw materials. No independent verification of accounting records. 2. No authorization of excess material requisitions or journal vouchers. Same person updates general ledger and prepares journal entries. 3. Inadequate access controls over raw materials and work-in-progress inventory. Supervisors participate directly in production. The main weakness is a lack of segregation of duties, as the accounting clerk maintains the general ledger, prepares journal entries, and reconciles sub-ledgers without independent verification of their work. This increases the risk of error or fraud.

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    Ais Weekly Assignment

    Uploaded by

    Prince Ryan
    214 views2 pages
    The document describes several internal control weaknesses: 1. Lack of segregation of duties as one person updates inventory records and has physical access to raw materials. No independent verification of accounting records. 2. No authorization of excess material requisitions or journal vouchers. Same person updates general ledger and prepares journal entries. 3. Inadequate access controls over raw materials and work-in-progress inventory. Supervisors participate directly in production. The main weakness is a lack of segregation of duties, as the accounting clerk maintains the general ledger, prepares journal entries, and reconciles sub-ledgers without independent verification of their work. This increases the risk of error or fraud.

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    The document describes several internal control weaknesses: 1. Lack of segregation of duties as one person updates inventory records and has physical access to raw materials. No independent verification of accounting records. 2. No authorization of excess material requisitions or journal vouchers. Same person updates general ledger and prepares journal entries. 3. Inadequate access controls over raw materials and work-in-progress inventory. Supervisors participate directly in production. The main weakness is a lack of segregation of duties, as the accounting clerk maintains the general ledger, prepares journal entries, and reconciles sub-ledgers without independent verification of their work. This increases the risk of error or fraud.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    214 views2 pages

    Ais Weekly Assignment

    Uploaded by

    Prince Ryan
    The document describes several internal control weaknesses: 1. Lack of segregation of duties as one person updates inventory records and has physical access to raw materials. No independent verification of accounting records. 2. No authorization of excess material requisitions or journal vouchers. Same person updates general ledger and prepares journal entries. 3. Inadequate access controls over raw materials and work-in-progress inventory. Supervisors participate directly in production. The main weakness is a lack of segregation of duties, as the accounting clerk maintains the general ledger, prepares journal entries, and reconciles sub-ledgers without independent verification of their work. This increases the risk of error or fraud.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    UTICA LIGHTING COMPANY(CENTRALIZED SYSTEM WITH DISTRIBUTED


    TERMINALS)
    c. Describe the internal control weaknesses.

    1. No supervision for timekeeping before sending the time tickets to the cost accounting
    department.
    2. Lack in segregation of duties between RM record keeping and physical custody activities.
    The storekeeper is also updating the raw material inventory records. GL function is not
    separated from inventory control.
    3. No direct access control as vendors deliver raw material inventories directly to the
    storeroom. There is also lack in indirect access control as work center supervisor accesses work
    order document.
    4. Involvement of unnecessary authority as the supervisor is involving in tasks such as
    preparing additional materials requisitions.

    2. EXCELSIOR LAWN FURNITURE(MANUAL SYSTEM WITH STAND-ALONE PC


    SUPPORT)
    c. Analyse the physical internal control weaknesses in the system.

    1. No segregation of duty between record keeping and asset custody activities. The
    maintenance of accounting records for RM inventory is not separated from the materials
    storeroom function.
    2. No independent verification procedures undertaken when posting to general ledger. The total
    movement of products from WIP to FG is not checked by reconciling journal vouchers with
    summaries of the inventory subsidiary ledger.
    3. Lack in direct access control as there is no limit to physical access to excess RM stock which
    are kept in the work center for future production.
    4. Incomplete accounting records as the FG inventory file is absent.
    5. Involvement of unnecessary authority as the supervisor is participating in the production
    process.
    6. No transaction authorization in the form of excess material requisition to release additional
    raw material.
    PROBLEM 4 - INTERNAL CONTROL

    1. No transaction authorization done to journal vouchers by a responsible manager before


    posting to general ledger which will lead to incorrect GL account balances.
    2. No segregation of duty as the task of updating the general ledger and preparing journal
    vouchers are done by the same person.

    The main control weakness for the Ram System Company is that the accounting clerk is
    updating the general ledger accounts and also has asset custody.

    This is a problem because there is no segregation of duties. Essentially, there should be


    more than one person doing all these tasks so there is a lesser chance of fraud.

    The accounting clerk shouldn’t be receiving documents, preparing journal vouchers,


    posting to the general ledger and also reconciling the sub-ledger accounts.

    In addition, there is also a high change for error since there is nobody double-checking
    the clerk’s work.

    There needs to be somebody checking the work that the clerk is doing to make sure there
    are no mistakes.

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