Client: “Listen, Tommy. You should know this by now, seeing as you’ve been an auditor for a while. I know we’re a new client but all clients are basically the same. I was an auditor 10 years ago, so I know. As always, for cash, we get our statements and record the amounts stated on the statements into our GL at each month-end. It would be immaterial to think about reconciling items since they should be pretty close to the same each period. Our team is lean, so please don’t go wasting my team’s time asking for further details. Everything ties without any issue. In regards to accounts payable we go through items daily as well. If something is not in by the 10th, we do not go back and post. We also do not make any accruals, as again they’re all the same each period, and so the budget to actual would catch anything material that is out of whack if our expenses are too high in the next month. We’ve never had a material difference. Let me know if you have any questions. I’ll be leaving today at 3 pm and I’m booked solid all week while you’re out here, but I’ll try to pencil in time if you really need anything. You shouldn’t need anything though.”

Based on this narrative, in your response please note one risk not being mitigated in either the cash cycle or the accounts payable cycle, and design control to mitigate the risk (Hint: you may need to do some research on typical risks on these cycles and typical controls to mitigate the associated risks).

Answer rating: 100% (QA)

As we well know there are risks inherent in almost every major business decision Even if decisionmakers opt out of an opportunity because it seems too risky that decision in itself can still be hazard... View the full answer