What do you understand by internal controls, Business Management

Assignment Help:

QUESTION 3

One of the responsibilities of management is to ensure the organisation has an effective system of internal control.

Required

(a) What do you understand by internal controls?

(b) State and explain five different types of internal control on which the auditor may wish to place reliance.

(c) Internal controls are not solution for all the ailments of an organization. State four limitations of internal controls.

(d) The following procedures for handling of cash remittances from customers are in effect at DEF Limited.

Incoming mail is opened in the mailroom, and all letters which include remittances are forwarded to the cashier. The cashier restrictively endorses all cheques and prepares an adding machine tape of them. The cashier prepares a remittance advice when the customer does not return the DEF remittance advice sent to the customers with monthly statements, unless the customer's cheque was accompanied by a customer-prepared document which could be used as a remittance advice. The cashier prepares an adding-machine tape of remittance advices and agrees the total to the tape of cheques received. The cashier uses one adding-machine tape for the bank deposit-slip she prepares and delivers with the cheque to the bank by messenger. The cashier delivers the remittance advices together with the second adding-machine tape to the debtors-ledger section where they serve as a source for posting to the accounts of individual debtors. The cashier prepares a memorandum listing of the receipts for the day which she delivers to the general-ledger section. The debtors-ledger section advises the general-ledger section of the total daily credits posted to the individual accounts of debtors in order that this total can be posted to the credit of the control account for debtors in the general ledger. This total can also be agreed with the total supplied by the cashier.

i. Describe any weaknesses in internal control surrounding cash receipts, and suggest two recommendations which you could make to the client, either one of which would eliminate these weaknesses.

ii. What are the possible effects of these weaknesses in internal control?


Related Discussions:- What do you understand by internal controls

Idea generation for new product, Ideas for new products can be obtained fro...

Ideas for new products can be obtained from customers (employing user innovation), the company's R&D department, competitors, focus groups, employees, salespeople, corporate spys,

Define the term organisation culture, QUESTION (a) Interpersonal skills...

QUESTION (a) Interpersonal skills are vital for interacting with people individually and in groups and developing such skills contribute to communication effectiveness in the o

State the organizational and personal managerial decisions, State the organ...

State the organizational and personal managerial decisions. Organizational and Personal decisions: A manager creates organizational decisions into the capacity of a compa

Critically analyze the stages involved in conflict process, Question 1: ...

Question 1: (a) What is Leadership? (b) What are the three critical situational variables identified by Fiedler? If these are very favorable, what is the most effective styl

Case study, You will be asked five questions about it from a range of topic...

You will be asked five questions about it from a range of topics covered in the unit.

What pricing strategies would you recommend, Question: Price is the onl...

Question: Price is the only element of the marketing mix which generates revenue, the other elements being all associated with costs. Hence its determination is crucial for any

Methods of communication within public sector organizations, Question 1: ...

Question 1: Briefly explain TWO advantages and TWO disadvantages of each of the following methods of communication within public sector organizations: a) Full staff meeting

CON216 - Legal Consideration in Contracting, An inventor developed a new tu...

An inventor developed a new turbofan blade for jet engines. He obtains a patent for the new design and sells all his patent rights to the design to Acme Jet Engine Company. Acme th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd