Question

FNSACC516

- The extortion conspire most efforts achieved when one or couple of people up power over numerous capacities and obligations or comple, obtaining cho merchants, and getting and endorsing installments Absence of sufficient compo money dispensing systems, for example, requiring tree endorsemen a specific sum, additionally love the danger of 2 Outsider merchant industriousness before going into con • • Samein FNSACOSIS Implement and maintain internal control procedures (Participant pulde) Calimer Charg dos a Summative assessment 2 Project le that cess han How to do it is a company which provides information and products for the DIY sector. It has grown significantly in the past few years and turnover has increased from around am to over $15m per annume cu acco The company was originally managed by the owners who, as it grew, hired staff from predominantly amongst people that they knew or were already known to other staff. Staff numbers had grown from less than 10 to Over during this period and many employees we married ou t with others with the company no longe r SC CORO . Audits are conducted annually and the audit company is well regarded and has been doing the audits since the company began. The w ors are regarded as part of the team and attend the Phersees tunction chyer At the most recent Christmas function one of the auditors, commented to the general manager, as an aside during a conversation, that he was surprised that given the increase in Burnover that the yearly profits were not higher The general manager decided that during the Christmas break he would look at the auditor's report and review the situation. The auditor's.ceport made no such statement but after examining the figures it was apparent that profits should have been. Ngher. When the office re-opened he requested the auditors to undertake an examination specifically to discover why it was so The auditors investigated and reported that the section manager responsible fo r purchases had paid invoices to a company which he and his wife owned. The amount paid to the company was in excess of $500,000 The section manager was responsible for signing off on work completed, or supplies received, and authorising payments. His wife was responsible for issuing the cheques. Both were signatories to the cheque account. What breaches of internal control were there and what modifications to procedures would you implement? Prepare a 5 page report outlining your suggested course of action.

Answer 1

Ans: - There was a man proves was a manipulation of $5,00,000 in the books of Accounts. ere there is no profit in yearly tumover in this Company. This at there are some fake bills or expenses in accounts book, We can check inherent risk at micro level and micro lovels is financial statements of company, Control Risk can be accessed on Internal that there are some tak control of Entity. The Following modifications should be implemented (1) Internal check procedure should be implemented on respective party transactions. (2) Cutoff Date procedures should be implemented. (3) Detail checking of Significant entries at Year End. Teams like Internal Audit team & Audit Committee should setup for clear view of transactions. 6 Analysis of profits with timover. (6) For issuing check, Dual authorization will be helpful.