Reference no: EM132873187
You are an accountant with MASCHA Enterprises, Inc. and are newly hired. Your first assignment is to review the processes in the EXPENDITURE cycle for internal control weaknesses.
You encounter the following scenarios in the Expenditure Cycle at MASCHA.
A. Purchases are made via telephone. Purchases are on credit-with the supplier extending the credit. Purchase order data are entered into the system by a clerk who inputs the supplier name, price, part number, and quantity into the system. The Purchasing clerk manually totals the order and the Purchase Order is generated.
B. The clerk then sends a copy of the purchase order to the receiving department. Upon receipt of the purchase order, receiving department inputs the information found on the packing slip and enters it into the system. The system then generates a receiving ticket. A copy of the receiving ticket is sent to accounts payable for reference. The parts are then loaded on a pallet and placed in the incoming goods (raw materials) warehouse by the clerk who received them.
Occasionally, the parts remain on the receiving dock until the next business day because of absent workers.
C. The accounts payable clerk enters the receiving data into the system along with the supplier invoice. The same clerk manually updates the Purchase Order. The clerk waits to receive the supplier invoice until performing the "three way match'. Upon approving the invoice for payment, the clerk files the documents in a folder, sorted by data. The clerk then send the approved invoice to the treasury department who generates the check. The signed check is returned to accounts payable for mailing.
Required:
Question 1: List the internal control threats in the above scenarios and list the internal controls that would prevent and/or detect the threat. Be specific as to the nature of the control; for example, "segregation of duties" is not acceptable. you need to specify what duties need to be separate. You need other controls besides segregation of duties; use this control only once. Identify both preventive and detective controls. ALSO identify the input edit control available in Access that would address the threat. Note: not all controls can be done in Access. Organize your answer as follows:
- LETTER THREATS
- INTERNAL CONTROLS
- INPUT EDIT CONTROLS
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