Reference no: EM13887229
Brown Company provides office support services for more than 100 small clients. These services include supplying temporary personnel, providing monthly bookkeeping services, designing and printing small brochures, copying and reproduction services, and preparing tax reports. Some clients pay for these services on a cash basis, some use 30-day charge accounts, and others operate on a contractual basis with quarterly payments. Brown's new office manager was concerned about the effectiveness of control procedures over sales and cash flow. At the manager's request, the process was reviewed by conducting a walkthrough. The following facts were identified. Review the identified facts (listed as A. through L. below) and complete the following.
a. What is a walkthrough, and why would it be useful for assessing controls over sales and cash flow?
b. List at least eight elements of ineffective internal control at Brown Company.
c. List at least six elements of effective internal control at Brown Company.
A. Contracts were written by account executives and then passed to the accounts receivable department, where they were filed. Contracts had a limitation (ceiling) on the types of services and the amount of work covered. Contracts were payable quarterly in advance.
B. Client periodic payments on contracts were identified on the contract, and a payment receipt was placed in the con- tract file.
C. Periodically, a clerk reviewed the contract files to determine their status.
D. Work orders relating to contract services were placed in the contract file. Accounting records showed Debit Cost of Ser- vices; Credit Cash or Accounts Payable; or Accrued Payroll.
E. Monthly bookkeeping services were usually paid for when the work was complete. If not paid in cash, a copy of the financial statement (marked "Unpaid ") was put into cash-pending file. It was removed when cash was received, and accounting records showed Debit Cash; Credit Revenue.
F. Design and printing work was handled like bookkeeping's work. However, a design and printing order form was used to accumulate costs and compute the charge to be made to the client. A copy of the order form served as a billing to the client and, when cash was received, as a remittance advice.
G. Reproduction (copy) work was generally a cash transaction that was rung up on a cash register and balanced at the end of the day. Some reproduction work was charged to open accounts. A billing form was given to the client with the work, and a copy was put in an open file. It was removed when paid. In both cases, when cash was received, the accounting entry was Debit Cash; Credit Revenue.
H. Tax work was handled like the bookkeeping services.
I. Cash from cash sales was deposited daily. Cash from receipts on account or quarterly payments on contracts was depos- ited after being matched with the evidence of the receivable.
J. Bank reconciliations were performed using the deposit slips as original data for the deposits on the bank statements.
K. A cash log of all cash received in the mail was maintained and used for reference purposes when payment was disputed.
L. Monthly comparisons were made of the costs and revenues of printing, design, bookkeeping, and tax service. Unusual varia- tions between revenues and costs were investigated. However, the handling of deferred payments made this analysis difficult.
Identify a control activity that would have been effective
: For each error (listed as A. through I. below), identify a control activity that would have been effective in either preventing or detecting the error.
|
Largest number of dislocations
: Assume that a resolved shear stress of 1.4 MPa is applied to a crystal and causes dislocations to pile up at a precipitate particle. Assume that the shear strength of the particle is 7.2 MPa. What is the largest number of dislocations that can pil..
|
Feature of shakespearean drama
: Start a discussion with an observation, comment, or question that relates to character, situation, or language in Othello or any feature of Shakespearean drama.
|
What should the traveler do now
: The traveler asks one particular native twice whether he should go to the left or to the right to reach the local village. Each time he is told "left". Should he take this advice, and, if he does, what are his chances of reaching the village?
|
List at least eight elements of ineffective internal control
: List at least eight elements of ineffective internal control at Brown Company. List at least six elements of effective internal control at Brown Company.
|
What effective change management practices used at nissan
: What effective change management practices were used at Nissan?
|
What is the probability that it came from supplier x
: An electronics assembly firm buys its microchips from three different suppliers; half of them are bought from firm X , whilst firms Y and Z supply 30% and 20%, respectively.
|
Density of screw dislocations
: Consider how dislocation intersections affect the stress necessary to continue slip. Let the density of screw dislocations be ρ (meters of dislocations/m3) and for simplicity assume that these dislocations are equally divided into three sets of dis..
|
A small private midwestern university
: A small private midwestern university has been accused of favoring male applicants in its admissions process.
|