Scribd
Upload
37 views

Assignment 1

Accounting information addresses three different functions like (1) providing information to external parties for investment and credit decisions (2) estimating the cost of products produced and services provided by the organization; and (3) providing information useful to internal managers who are responsible for planning, controlling, decision making, and evaluating performance. Financial accounting is designed to meet external information needs and to comply with generally accepted accounting

Uploaded by

Lyka M. Manaloto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
37 views

Assignment 1

Accounting information addresses three different functions like (1) providing information to external parties for investment and credit decisions (2) estimating the cost of products produced and services provided by the organization; and (3) providing information useful to internal managers who are responsible for planning, controlling, decision making, and evaluating performance. Financial accounting is designed to meet external information needs and to comply with generally accepted accounting

Uploaded by

Lyka M. Manaloto
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Assignment 1: Internal Controls

MANALOTO, Lyka M.
3BSA 3

An effective system of internal control includes the segregation of incompatible duties. Some
of the examples presented represent incompatible duties. Commend on the specific risks (if
any) that are caused by the combination of tasks.

a. The treasurer has the authority to sign checks but gives the signature block to the
assistant treasurer to run the check-signing machine.

The treasurer's role is to monitor the assets or accounts. Since the treasurer is not in charge of
approving or recording the transaction, there is no conflict. As the labor is distributed among
the staff, there is no danger. Outsourcing the job of signing checks to the assistant treasurer
does not contradict the idea of separation of responsibilities because the assistant treasurer
does not authorize or record transactions.

b. The warehouse clerk, who has the custodial responsibility over inventory in the
warehouse, may authorize disposal of damaged goods.

This position clearly poses a danger because the warehouse clerk is solely in charge of the
physical case of the inventory and cannot be chosen to supervise the authorisation of damage
disposal. The clerk's improperly provided authorisation authority usually leads to a danger of
fraudulent activity and misleading records.

c. The sales manager, who works on commission based on gross sales, approves credit
and has the authority to write-off uncollectible accounts.

The sales manager bears the danger of tampering with the data, which might lead to the
proposal of questionable credit that shouldn't have been authorized and have a substantial
detrimental effect on the company. Having control over credit authorization and accounts
receivable record keeping is forbidden since it is not one of a sales manager's duties. Through
performance and planning, the sales manager should focus on boosting sales and making sure
that the business has a consistent cash flow.

d. The shop foreman submits time cards and distributes paychecks to the employees.
It is extremely dangerous because the shop foreman has the authority to hand out paychecks
and distribute time cards, both of which are against the law. There are other worrying
possibilities that may happen, such a time clerk omitting to record an employee's firing and
instead retaining the paychecks for himself or fiddling with the time card records to get his
time and still get paid.

e. The accounting clerk posts to individual account receivable subsidiary accounts and
performs the reconciliation of the subsidiary ledger and the general ledger control
account.

It is against the law to have an accounting clerk who is also in charge of verifying the
accuracy of the transactions they record. Since it has delicate data and sums that ought to be
accurately record. The purpose of a reconciliation is to have a balance amount and make sure
that neither is out of balance by adding a decimal point. However, there is a chance that the
clerk could embezzle money as a result of fraud by simply making a mistake in the balances,
which they could easily cover up and use to get the money.

You might also like