Each of the following situations reveals an internal control weakness: i (Click on the icon to...

  

Transcribed Image Text:

Each of the following situations reveals an internal control weakness: i (Click on the icon to view the situations.) Requirements 1. Identify the missing internal control characteristic in each situation. 2. Identify each firm's possible problem. 3. Propose a solution to the problem. Situation a. In evaluating the internal control over cash payments of Judd Manufacturing, an auditor learns that the purchasing agent is responsible purchasing diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. Requirement 1. Missing Control Characteristic: Requirement 2. Possible Problem: Requirement 3. Potential Solution: a. In evaluating the internal control over cash payments of Judd Manufacturing, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. b. Krysta Pesarchick owns an architectural firm. Pesarchick's staff consists of 16 professional architects, and Pesarchick manages the office. Often, Pesarchick's work requires her to travel to meet with clients. During the past six months, Pesarchick has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. Pesarchick learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office. c. lan Holt has been an employee of the city of Streetsboro for many years. Because the city is small, Holt performs all accounting duties, in addition to opening the mail, preparing the bank deposit, and preparing the bank reconciliation. Each of the following situations reveals an internal control weakness: i (Click on the icon to view the situations.) Requirements 1. Identify the missing internal control characteristic in each situation. 2. Identify each firm's possible problem. 3. Propose a solution to the problem. Situation a. In evaluating the internal control over cash payments of Judd Manufacturing, an auditor learns that the purchasing agent is responsible purchasing diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. Requirement 1. Missing Control Characteristic: Requirement 2. Possible Problem: Requirement 3. Potential Solution: a. In evaluating the internal control over cash payments of Judd Manufacturing, an auditor learns that the purchasing agent is responsible for purchasing diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. b. Krysta Pesarchick owns an architectural firm. Pesarchick's staff consists of 16 professional architects, and Pesarchick manages the office. Often, Pesarchick's work requires her to travel to meet with clients. During the past six months, Pesarchick has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. Pesarchick learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office. c. lan Holt has been an employee of the city of Streetsboro for many years. Because the city is small, Holt performs all accounting duties, in addition to opening the mail, preparing the bank deposit, and preparing the bank reconciliation.

Answer rating: 100% (QA)

1 23456789 a 6 b 8 C 10 d 11 12 e 13 14 f A Missing Interna... View the full answer