Reference no: EM132745635

Question: You are the auditor of Pune Pty Ltd, which supplies sporting equipment and apparel. The manager of Pune Pty Ltd has asked that you perform a review of the internal controls within the cash payments area. From your discussions with management and staff you determine the following facts: ? The accounts payable clerk receives all supplier invoices. The clerk then checks the invoices to relevant delivery notes. If a discrepancy is found, the clerk telephones the supplier to rectify the problem. No payment is made until the clerk is satisfied the problem has been rectified. Often, no documentation is kept by the clerk to indicate how problems are resolved. ? If there are no discrepancies between the supplier invoice and the delivery note, the clerk prepares a cheque requisition for the amount indicated on the supplier invoice and signs the cheque requisition as evidence of matching the invoice to the delivery notes. She then files the supplier invoice with the relevant delivery note. The only markings made on the invoice are a series of 'ticks' (√) indicating the invoice has been matched to the delivery note. ? The completed cheque requisition is forwarded to the banking clerk, who prepares a manual cheque and posts an appropriate journal entry. ? Once completed, the banking clerk forwards the cheque requisition and unsigned cheque to the managing director, who signs the cheque. All signed cheques are returned to the banking clerk for mailing.

Required: Identify four weaknesses in Martin Pty Ltd's internal control for the cash payments area. Give reasons.