Question

10 5-2,5-3 THE -2 Identifying Internal Controls over Financial Reporting Erasing has a system of internal control with the following procedures. Match the procedure to the corresponding internal control principle Procedure Bernal Coro Principle 1. The treasurer signs checks. A. Establish responsibility 2. The treasurer is not allowed to make bank B. Segregate duties deposits. C. Restrict access 3. The company's checks are prenumbered. D. Document procedures 4. Unused checks are stored in the vault. E. Independently verify 5. A bank reconciliation is prepared each month. In 5.7 5-3

Answer 1

1. A) Establish responsibility

A treasurer signs check means treasurer responsible for all checks issued and its fixes responsibility of treasurer.

2.B) Segregate duties

Segregation of duties means same person should not have all powers to handle and recording of transactions .For example treasurer is not allowed to make bank deposits.

3.D)Documents procedure

Documents should be pre numbered so that any faulty actions can be mitigated.Comapnys all checks should be prenumbered .

4.E)Restricts action

Unused inventory and checks should be restrict to authorised person and only he can access them.for example unused checks are in the vault.

5.E) Independent verify

There lot of proceudres should be done independently to check that all financial records are free from material misstatements.for example Preparing bank reconciliation statement to check difference between Bank and cash balance