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Business Process

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Business Process and Internal Control Memo for Global Consulting Corporation

1. Prior to the bonus calculation, another employee needs to be verifying these reports. This includes, verifying expenses (matching receipts /invoices to payments), verifying invoices collected (matching payments to remittance advice to A/R master data) and verifying that the time spent on the engagement is in line with the budget proposed at the onset of the engagement. If this time is not within the budget, an explanation is necessary.

2. Each office manager must approve the invoice prior it being submitted for payment. The manager must verify the vendor, verify that goods/services were received, etc.

3. When the corporate office receives a remittance advice and check, there is no indication as to who is preparing the deposit and who is recording the journal entry. These need to be separate duties to separate employees to avoid lapping or other fraudulent acts. Of course, there is always the possibility of collusion, so forced vacation and rotation of duties must also be enforced.

4. GCC has a third-party maintained cloud drive for data storage. They have not developed any corporate policy regarding uploading data or backing up existing data. All employees have access to this data storage within the office without any login credentials. There is potential for an employee to change data in order to falsify profits, create fake vendors, falsify customer payments, steal client payment information (credit card or bank account information) or any number of other items to redirect corporate funds to their own pockets. GCC needs to develop policy and procedures for this cloud data storage. These should include login credentials within the office, not just outside the physical office. Requiring login credentials at least make it possible to have an audit trail of data changes. With this audit trail, GCC can see who made changes, when the change was made and potentially avoid fraudulent changes. *Rosas & Bowman CPAs*

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