Joseph, the Chief Operations Officer of Gladbiz, has been presented with the latest internal audit report....

 

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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

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