Question 1

For each the following situations, evaluate the segregation of duties and describe any deficiency that you found. Indicate possible error that might occur because of the inadequate segregation of duties. Recommend the additional control that should be implement by the company.

Situations:

d. Bredford Manufacturing is an audit client with approximately $15 million in annual sales. All of its accounting is performed on a high-end microcomputer located in a separate office area in the accounting department. The microcomputer has three terminals, one in the controller's department (used mostly for analysis purposes), one in the assistant accountant's area (individual is responsible for all accounting except cash receipts and sales billing), and one in the office of the individual responsible for billing and cash receipts. The office housing the microcomputer is locked each night when the controller leaves, but if the office is behind in processing, the controller often leaves it open for the sales clerk to work overtime and catch up on processing.