Reference no: EM133205581

One of the small branch of Maktan Co. in San FrancisCo employs Anita, the branch manager, and her sales assistant, Gerald. The branch uses a bank account in San FrancisCo to pay expenses. The account is kept in the name of Maktan Co.. To pay expenses, checks must be signed by Anita or by the treasurer of Maktan Co., Helen. Anita receives the cancelled checks and bank statements. She reconciles the branch account herself and files cancelled checks and bank statements in her records. She also periodically prepares reports of cash disbursements and sends them to the home office.

1. Why is there no segregation of duties in this circumstance?

2. What is the most likely misstatement that could occur and explain?

3. How would you improve internal controls to reduce the risk of misstatement to an acceptable level?