You're the senior auditor on a new client. The client is a moderate-sized merchandising company. As part
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Question:
You're the senior auditor on a new client. The client is a moderate-sized merchandising company. As part of your review of the client's system of internal controls you note that:
1. Cash receipts are not always deposited on a timely basis. (You noted several examples where cash was deposited 4 days after receipt.)
2. Inventory is not counted periodically.
3. No one reviews the account distributions in the purchases journal when the accounting manager takes his two-week vacation each year.
Which of the above would most likely be considered a material weakness?
Explain your answer.
a) is it reasonably possible that an error could occur?
b) could the error could be material?
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