Joseph, the Chief Operations Officer of Gladbiz, has been presented with the latest internal audit report....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Joseph, the Chief Operations Officer of Gladbiz, has been presented with the latest internal audit report. He is particularly perturbed by the section that noted several critical areas of concem. He wants to be fully prepared to respond in next week's Board of Directors meeting. In summary, the internal auditors noted the following: (1) (ii) (iii) Inventory- there have been discrepancies between the system inventory level and the actual inventory count, indicating that inventory transactions were not timely and/or properly recorded in the ERP system. The company is shorthanded in the warehousing department, and the volume of transactions were not timely or accurately recorded in the inventory management system. (v) Fixed Assets there were three instances whereby fixed assets purchases were not authorised by the designated person. It occurred when the authoriser was out of town, and these "urgent" purchases were instead approved by the line manager. Suppliers - It was found that several purchase orders were issued to suppliers that were not found in the official Approved Supplier List. Although the total purchase amount from the se non-approved suppliers was not significant, it was against company SOP to issue POs to non-approved suppliers. - (iv) Cash Despite the company's move towards cashless payment, the finance department maintains a small petty cash amount of $2,000 to pay for miscellaneous expenses incurred by any employees. However, the petty cash box was never monitored and transactions not fully accounted for. It is left to the integrity of the finance staff to manage the cash float. The internal auditors found that at least $5,673 were issued as petty cash but there was a lack of supporting documents or records. Payment - due to the shortage of staff, the payment voucher (PV) preparer also doubled up as the payment authoriser for "small" (less than $2,000) purchases. PVs with larger amounts still require Finance Manager's approval. However, this is only a "temporary" measure until a new staff is recruiter the payment authoriser role. Discuss the internal control weakness and threats for each of the areas of concern in the case study above, and propose suitable technology-based solutions or recommendations to address the internal control weaknesses accordingly. Present your answer in a tabular format. Recommendations No. Area Weakness Threat Joseph, the Chief Operations Officer of Gladbiz, has been presented with the latest internal audit report. He is particularly perturbed by the section that noted several critical areas of concem. He wants to be fully prepared to respond in next week's Board of Directors meeting. In summary, the internal auditors noted the following: (1) (ii) (iii) Inventory- there have been discrepancies between the system inventory level and the actual inventory count, indicating that inventory transactions were not timely and/or properly recorded in the ERP system. The company is shorthanded in the warehousing department, and the volume of transactions were not timely or accurately recorded in the inventory management system. (v) Fixed Assets there were three instances whereby fixed assets purchases were not authorised by the designated person. It occurred when the authoriser was out of town, and these "urgent" purchases were instead approved by the line manager. Suppliers - It was found that several purchase orders were issued to suppliers that were not found in the official Approved Supplier List. Although the total purchase amount from the se non-approved suppliers was not significant, it was against company SOP to issue POs to non-approved suppliers. - (iv) Cash Despite the company's move towards cashless payment, the finance department maintains a small petty cash amount of $2,000 to pay for miscellaneous expenses incurred by any employees. However, the petty cash box was never monitored and transactions not fully accounted for. It is left to the integrity of the finance staff to manage the cash float. The internal auditors found that at least $5,673 were issued as petty cash but there was a lack of supporting documents or records. Payment - due to the shortage of staff, the payment voucher (PV) preparer also doubled up as the payment authoriser for "small" (less than $2,000) purchases. PVs with larger amounts still require Finance Manager's approval. However, this is only a "temporary" measure until a new staff is recruiter the payment authoriser role. Discuss the internal control weakness and threats for each of the areas of concern in the case study above, and propose suitable technology-based solutions or recommendations to address the internal control weaknesses accordingly. Present your answer in a tabular format. Recommendations No. Area Weakness Threat
Expert Answer:
Answer rating: 100% (QA)
No Area Weakness Threat Recommendation i Inventory Discrepancies between system inventory level and actual inventory count due to untimely and inaccur... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
In Exercises 1114, graph each equation in a rectangular coordinate system. If two functions are indicated, graph both in the same system. Then use your graphs to identify each relations domain and...
-
If the pressure of a gas is doubled while its volume is held constant, by what factor does vrms change?
-
Consider the springtime melting of ice in the mountains, which gives cold water running in a river at 2C while the air temperature is 20C. What is the availability of the water (SSSF)...
-
What are high-yield bonds? What is their role in financing firms?
-
A VC firm is considering two different structures for its new $250M fund. Both structures would have management fees of 2 percent per year (on committed capital) for all 10 years. Under Structure I,...
-
Calculate the maturity value of a simple interest, 8 - month loan of $ 4 , 0 0 0 if the annual interest rate is 3 . 9 % .
-
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. The production superintendent was pleased when...
-
Cash and cash equivalents, December 31 prior year-end $ 40,000 148,000 3,500 76,500 185,500 65,000 60,250 105,250 24,750 10,000 20,000 495,000 254,500 Cash paid for salaries Cash and cash...
-
Compute the rate of population per unit volume for collisional excitation 8 R12 = n.N | 012(E).v(E).(E)dE E12 and the rate of population per unit volume for collisional de-excitation 8 R21 neN2 021...
-
What are three self-leadership approaches that John F. Kennedy and Ronald Reagan may need to improve or whose behavior shows mastery? Why did you come to this conclusion for each of the three...
-
Propose ONE option combination strategy that involves more than one option contract for the A$ commercial paper for the currency risk faced by this exposure. ADM's management has expressed a desire...
-
The series is a geometric series. (1) What is its initial term a ? a = (ii) What is the common ratio r ? T = Ay (iii) What is its sum S? Input 333 if the series is divergent. S= AGT 23n+2 n=2 (37)2
-
Due to topographic constrains, the following data is enforced to design a horizontal highway circular curve with a transitional spiral: - Deflection angle = 20 Radius of the Curve = 2000 ft Two-lane...
-
Using the Bush Fire Map [2 points]: 3 2 Figure 1: input heights = [0,1,0,2,1,0,1,3,2,1,2,1]. Output = 4. a Draw a graph of the regions on the map b Store the graph of this map in code c Write an...
-
Before the 1973 oil embargo and subsequent increases in the price of crude oil, gasoline usage in the United States had grown at a seasonally adjusted rate of 0.57 percent per month, with a standard...
-
Parent Co. owns 75% of Sub Co. and uses the cost method to account for its investment. The following are summarized income statements for the year ended December 31, Year 7. Additional Information: ...
-
A Company owns 75% of B Company and 40% of C Company. B Company owns 40% of C Company. The following information was assembled at December 31, Year 7. Additional Information: A Company purchased its...
-
Hull Manufacturing Corp. (HMC), a Canadian company, manufactures instruments used to measure the moisture content of barley and wheat. The company sells primarily to the domestic market, but in Year...
-
Number the following activities from 1 to 3 in the order corresponding to the typical flow of cost in a CPA firm. Record the time worked on a client project by professional staff. Record the...
-
At December 31, 2019, the end of its fiscal year, Kelly Metal Products Corporation collected the following data for 2019: Required Prepare a schedule of cost of goods manufactured and sold for Kelly...
-
Brooklyn Company reported the following amounts for October: Use Excel to prepare a schedule of cost of goods manufactured for October. Beginning raw materials inventory. Beginning work-in-process...
Study smarter with the SolutionInn App