Question

Part 1: The following procedures were recently installed by Raspberry Creek Company: After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. The treasurer then stamps the voucher and supporting documentation as paid and returns the voucher and supporting documentation to the accounts payable clerk for filing. The accounts payable clerk prepares a voucher for each disbursement. The voucher along with the supporting documentation is forwarded to the treasurer's office for approval. Along with petty cash expense receipts for postage, office supplies, etc., several postdated employee checks are in the petty cash fund. 4. At the end of the day, cash register clerks are required to use their own funds to make up any cash shortages in their registers. 5. At the end of each day, all cash receipts are placed in the bank's night depository. 6. At the end of each day, an accounting clerk compares the duplicate copy of the daily cash deposit slip with the deposit receipt obtained from the bank. 7. All mail is opened by the mail clerk, who forwards all cash remittances to the cashier. The cashier prepares a listing of the cash receipts and forwards a copy of the list to the accounts receivable clerk for recording in the accounts. 8. The bank reconciliation is prepared by the cashier, who works under the supervision of the treasurer. Requirements: Use the Control Procedures to answer the following A Indicate whether each of the procedures of internal control over cash represents (1) a strength or (2) a weakness. B For each weakness, indicate why it exists and make a recommendation,

Answer 1

After necessary approvals have been obtained for the payment of a voucher, the treasurer signs and mails the check. This is weakness. Requiring cash register clerks to make up any cash short- ages from their own funds gives the clerks an incentive to short change castomers. That is, the clerks will want to make sure that they don't have a shortage ath the end t the day. In addition, one might also assume that the lenks can keep any overages. This would again encouose clerks to short change customers. The short changing of customers colll dot create customer complaints, etc. The best Policy is to report any cash shortages or overages at the day. If there is consistently a cash short over then corrective action could be taken. end of each day. if there is consi 2 the accounts Payable clerky prepares a voucher for each disbursement. strength The Disbursement voucher (ov) document is used to make Payments not related to the procurement of goods or servicey. For any payment against Purchase order (PO). Please use the Payment Request document, payment Reason codes ,Each Dv document must have a specific payment recson code

Selected these reason codes drive which types of payees accounts, object codes, and sub objects are allowed on the document in order to select a payment reason code, click on the Payce id lookup icon on the payment information tab please refer to the payment Reason codes. The Dy docu- -mont refers to vendors as payees: but it utilizers the same Vendor table as requisitions and purchase orders. If you are having trouble finding avendor in the lookup or if You need to add or opdate an existing vendor. weakness! 1) Initiator -save or submit 2) Fiscal officer - Approve Disapprove 3) organization Review (optional). Approve Disapprove 4) Accounts payable or Tax Accounting (depending on the Payamenty Reason code)Approve Disapproval 3 Along with Petty cash for postage, expense receipts office supplies etc., This is weakness The mail clerk should prepare an initial listing of cash remittances before forwarding the cash receipts to cashier This establishes intital accountablity

for the cash receipts, the mail clerk should forward a Copy of the listing of remiktances to the accounts re- -ceivable clerk for recording in the accounts 4) At the end of the day, cash register clerks are required to use their own funds to make up any Shortages Cash in their registers. This is weakness Requiring cash register clerks to make up any cash Shortages from their own funds gives the clerks an incentive to short change customers. That is, the clerks will want to make sure that they don't have a shartage at the end of the day. In addition one might also assume that the clerks can keep any overages. This would again encourage deins to short change customers. The short changing of customers will create customers complaints, etc. The best Policy is to report any cash Shortages or overages at the end of each day.