Learning Team Questions
Learning Team E
ACC542

Learning Team Questions 1. Listed below are 12 internal control procedures or requirements for the expenditure cycle (purchasing, payroll, accounts payable, and cash disbursements) of a manufacturing enterprise. For each of the following, identify the error or misstatement that would be prevented or detected by its use. * Duties segregated between the cash payments and cash receipts functions.
Preventative – segregation of duties ensure person receipting in money is not the one making payments. This prevents the business from unauthorized entry of invoices and payments, and prevent unauthorized purchases. * Signature plates kept under lock and key.
Preventative - This type of control may prevent the fraud or error due to wrong authentication or forgery. Employees can misuse this to their benefit. * The accounting department matches invoices to receiving reports or special authorizations before payment.
Detective – This is to ensure that the vendor is charging for the correct items at the agreed upon price as well ensuring that what was ordered is what is received prior to payment. * All checks mailed by someone other than the person preparing the payment voucher.
Detective - Deters the unauthorized use of cash because of the element of fear of being caught. * The accounting department matches invoices to copies of purchase orders.
Detective - to match the purchase order to the invoice and ensure that what is ordered is what is being charged by the supplier. A purchase order identifies the quantity, per unit with total taxes and shipping. Assures that payment is made only for goods received. * Keep the blank stock of checks under lock and key.
Preventative - Safeguards a very liquid asset. Makes it difficult to successfully change, alter the check amount and prevents