Reference no: EM132838303

Question - The following description represents the policies and procedures for agent expense reimbursements at Nada Gold Insurance Company.

Agents submit a completed expense reimbursement to their branch manager at the end of each week. The branch manager reviews the expense report to determine if the claimed expenses are reimbursable based on the company's expense reimbursement policy statements and amount reasonableness. Company policy states that agents are to document any questionable expense item and the branch manager must approve in advance expenditures exceeding RM2,000.

After the expenses are approved, the branch manager sends the expense to the home office, where accounting records the transaction and cash disbursements prepare the expense reimbursement check. Cash disbursements send the expense reimbursement checks to the branch manager, who distributes them to the agents.

To receive cash advances for anticipated expenses, agents must complete a Cash Advance Approval form. The branch manager reviews and approves the Cash Advance Approval form and sends a copy to accounting and another to the agent. The agent submits the copy of the Cash Advance Approval form to the branch office cashier to obtain the cash advance.

At the end of each month, internal audit at the home office reconciles the expense reimbursements. It adds the total ringgit amount on the expense reports from each branch, subtracts the sum of the ringgit totals on each branch's Cash Advance Approval form, and compares the net amount to the sum of the expense reimbursement checks issued to agents. Internal audit investigates any differences.

Required - Evaluate FIVE strengths and FIVE weaknesses of Nada Gold's internal control systems.