Question

An internal control structure is an organizational plan to protect assets, ensure the integrity of accounting information, and promote operational efficiency. Indicate whether each of the following situations is satisfactory or unsatisfactory in a manufacturing company from the viewpoint of good internal control. If the situation is unsatisfactory, suggest an improvement.
a. Purchase requisitions are made verbally by departments to the purchasing agent.
b. The clerk who is responsible for maintaining raw material inventory records does not have access to the storeroom where the raw materials are kept.
c. All receiving operations related to shipments from vendors are handled by the clerks who are responsible for managing the storeroom where goods are kept.
d. Purchase orders are prepared by the clerks who are responsible for managing the storeroom where goods are kept.
e. Employees who are responsible for counting the shipments of goods received from vendors do not have access to the information concerning how many units were ordered from the vendor.
f. A periodic physical inventory is taken and reconciled to the materials inventory records by the same clerks who are responsible for managing the storeroom where goods are kept.
g. Purchase orders must be compared to receiving reports before a vendor can be paid.
h. Copies of purchase orders are sent to the personnel who originally requested the material.
i. A firm employs personnel whose only function is to move materials and supplies as needed by the production departments.



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  • CreatedFebruary 26, 2015
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