Reference no: EM133039101

Question 1:

Richard has been a highly regarded employee of the Brier Corporation for almost 20 years. Her loyalty to the company is reflected in her dedication to her job as general accounting clerk from which she has not taken a vacation in almost 12 years. Because of her dedication and long tenure, she has acquired many related responsibilities, which has allowed the Brier Corp to reduce its work force through attrition, control salary expenses and become more efficient and competitive. The following describes Richard's responsibilities.

Richard receives copies of credit sales orders from the sales department. From these documents she accesses the AR subsidiary ledger from her office computer and records the AR. She then records the sale in the sales journal and posts the transactions to the general ledger accounts. Cash receipts in payment of customer AR come directly to her office. She records the cash receipts in the GL cash and AR accounts and updates the AR subsidiary ledger. She then endorses the checks "for deposit only" and deposits them in the bank at the end of each day.

Required: 

1. Identify any control problems in the procedures described above. 
2. Based on the control problems identified above, what sorts of fraud are possible in this system? 
3. What controls are needed to reduce the risk of fraud?

Question 2:

Miss Anglea recently joined A2A Limited as an accounting clerk. As a part of financial reporting process, she receives the following source documents to prepare journal vouchers for general ledger entries. 

1. purchase orders, 
2. sales invoices, and 
3. vendor invoices

At the end of each day, Angela posts the journal vouchers to the general ledger and the related subsidiary ledgers. Each month the clerk reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that they balance. 

Required: Discuss any control weaknesses and risks associated with the accounting information system of A2A Limited