Question

Company B offers parenting advice to young single mothers. Most of the agency's revenues are from government grants. The general manager is responsible for all of the accounting work, including approving invoices for payment, preparing and posting all entries into the accounting system, and preparing bank reconciliations. 1. Based on the scenario, identify the weakness. 2. What could go wrong? 3. Provide a recommendation to address/remove the control weakness

Answer 1

1. The weaknesses can be

• Concentration of power in few hands
• Government interventions

2. Things that can go wrong

• As revenue's major chunk comes from Government, any failure to comply with any regulation or requirement can cause major losses both financial as well as non financial.
• High chances of fraud as power is concentrated in hands of one person

3. To control the weaknesses

• Appoint a professional to ensure compliance of the laws, regulations,etc.
• Division of power to different persons.