A system of internal control consists of policies and procedures designed to help company to achieves...

 

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A system of internal control consists of policies and procedures designed to help company to achieves its objectives and goals. Assume you have been appointed as the auditor for Kaguya Bhd. Assess each of the following scenarios by highlighting the effect of the internal controls' weaknesses. For each of the scenario, you are also required to prepare a suggestion of improvement. i. ii. iii. iv. V. Currently, there are two accounts payable clerks in the Finance Department. Since there was insufficient manpower, both clerks were given the authorisation to handle the vendor master file for efficiency purpose. The company specialises in beauty products and everything is sold via online channel. Orders are usually received either through phone calls or through website chat-box. When customers placed their order, the staff in-charged who received the order will enter all details to be recorded on the sales invoices in the computer system. In order to ensure it is a smooth process, all staff are given a complete list of the products together with their respective prices in a hardcopy document. Last year, the company had a computer disaster whereby half of the company's data was lost due to inefficient (manual) data backup. In order to avoid similar disaster, the company appointed IT Express to systemise their data backup. By Dec 2019, all data is scheduled to be sent for backup on every Tuesday and Friday. A few incidents involving double payment to vendors have been detected. The second payment were usually made because the vendor sent a duplicate copy of the original invoice two weeks after the payment was due. All employees in Kaguya Bhd are required to scan their staff I/D in order to enter their main office. Last week, there was a power surge and the scanner was fried, which results in the scanner not functioning at all. Since there is no new staff employed and the security guard knows everyone, the management decided not to fix the scanner to save their cost. A system of internal control consists of policies and procedures designed to help company to achieves its objectives and goals. Assume you have been appointed as the auditor for Kaguya Bhd. Assess each of the following scenarios by highlighting the effect of the internal controls' weaknesses. For each of the scenario, you are also required to prepare a suggestion of improvement. i. ii. iii. iv. V. Currently, there are two accounts payable clerks in the Finance Department. Since there was insufficient manpower, both clerks were given the authorisation to handle the vendor master file for efficiency purpose. The company specialises in beauty products and everything is sold via online channel. Orders are usually received either through phone calls or through website chat-box. When customers placed their order, the staff in-charged who received the order will enter all details to be recorded on the sales invoices in the computer system. In order to ensure it is a smooth process, all staff are given a complete list of the products together with their respective prices in a hardcopy document. Last year, the company had a computer disaster whereby half of the company's data was lost due to inefficient (manual) data backup. In order to avoid similar disaster, the company appointed IT Express to systemise their data backup. By Dec 2019, all data is scheduled to be sent for backup on every Tuesday and Friday. A few incidents involving double payment to vendors have been detected. The second payment were usually made because the vendor sent a duplicate copy of the original invoice two weeks after the payment was due. All employees in Kaguya Bhd are required to scan their staff I/D in order to enter their main office. Last week, there was a power surge and the scanner was fried, which results in the scanner not functioning at all. Since there is no new staff employed and the security guard knows everyone, the management decided not to fix the scanner to save their cost.

Answer rating: 100% (QA)

i The weakness of this internal control is that it creates a single point of failure as both clerks are accountable for handling the vendor master file This means that if one of the clerks falls ill o... View the full answer