Reference no: EM133156524

Question - You are the auditor of Flagstaff Solutions Ltd (FSL) for the year ended 30th June 2020. During the planning process you note that the human resources department of FSL has been short staffed recently and has not been able to provide training to new staff responsible for administrative and financial processing functions. Generally, new staff members have experience within the industry.

While reviewing the accounting system you note that accounts receivable balance are agreed to the sub-ledger, but there is no aging review, and an increasing percentage of total receivables are falling into 90 days+ category. Time sheet for processing staff are approved by supervisors, than passed on to Damian Smith in Payroll. Damien prepares the pay sheet information, which gets reviewed against the time sheets and approved by the CFO, John Cummins, prior to payment being processed.

Access to the information technology (IT) system at FSL is controlled by usernames and passwords, which are required to be changed regularly through a programmed system prompt.

Required - Identify and explain two internal control strengths and two Internal control weaknesses for FSL.