Reference no: EM13341728

1. Identify one or more control procedures for each of the situations below.

• Controls can include general controls and application controls; any control you've studied to date
• Be very specific; citing segregation of duties is not sufficient. You must identify which specific duties should be segregated
• Remember preventive controls are better than detective controls
• Identify the best control first
• Identify as many relevant controls as possible
• Be creative-the controls do not necessarily have to be ones we have studied in class
• I have identified the number of controls I identified in parentheses at the end of each scenario
• I have completed the first scenario for you as an example.
a. A Purchasing agent orders materials from a supplier that he partially owns.
1) Company policy that requires purchasing agents to disclose any financial interest or position which they hold in supplier companies
2) Only place orders with approved vendors
3) Logical access controls to vendor master file
4) Check to ensure that purchasing agents do not have investments in vendors on the approved vendor list
a. Ask vendors to verify
b. Dun & Bradstreet report

5) Purchasing agents with real or potential conflicts of interest should not process purchase orders for the vendor with whom they have a relationship

6) The purchasing manager should review purchase requisitions before approving a purchase order

b. Receiving dept. employees steal inventory, and then claim the inventory was sent to the warehouse.

c. An unordered supply of copier paper delivered to the office is accepted and paid for because the "price is right." However, when all of the copiers are jammed, it becomes obvious that the ‘bargain' paper is of inferior quality.

d. Removed

e. A company is late in paying a particular invoice. Consequently, a second invoice is sent, which crosses the first invoice's payment in the mail. The second invoice is submitted for processing and also paid.

f. Inventory records show that an adequate supply of copy paper should be in stock, but none is available on the supply shelf.

g. The inventory records are incorrectly updated when a receiving dock employee enters the wrong product number at the terminal.

h. A clerical employee obtains a blank check and writes a large amount payable to a fictitious company. The employee then forges the CFOs name and cashes the check.

i. Removed

j. The petty cash custodian confesses to having "borrowed" $12,000 over the last five years.

k. A purchasing agent adds a new company to the supplier master file. However, the company does not exist. Subsequently, the purchasing agent submits invoices from the fake company for various cleaning services. The invoices are paid.