As a new employee at Canyon rental, an outdoor outfitters and supply shop, your

Question

As a new employee at Canyon rental, an outdoor outfitters and supply shop, your boss has asked you to look at the internal control system within the store. He is seeking a loan for expansion and must have his books audited. The auditor asked about his control procedures and documentation. He has no idea what the auditor is talking about. Your boss has asked you to do what you need to understand the system and has asked for a memo with your observations and recommendations by the end of the week. Through interviews and observation you notice the following: Purchase orders, and sales invoices are not pre-numbered due to the higher cost of printing the forms. To save time the sales clerk enters the sales at the end of the day into the accounting records, prepares the deposit and delivers it to the bank. The sales clerk a trusted and long-term employee grants sales returns at her discretion. The purchasing manager both orders merchandise and approves the payment for the order. Betty Gamble, the bookkeeper has not taken a vacation in three years. Checks are brought to the owner twice a week for signing. He is overwhelmed by all of the paperwork and has asked for the checks only on which he stamps his signature. In your memo, give a summary of the elements of an effective internal control system. Comment on each of your observations and if there is a weakness provide a solution. Your memo should be 2-3 pages.

Explanation / Answer

To : Boss, Canyon rental,

From :New employee

Date : 12/dd/2015

Subject = observations Results

     Our Accounts Department have not maintained the accounts properly, there is legal issue some records has not recorded as per GAAP Rules.   Both the purchase and sales order are not pre numbered,due to cost saving, but order should be pre numbered,   Sales clerk have long term employee so she/he records the sales directly not perfectly records as per accounting rules. Our company lacking in maintain the proper internal control,

we can use the SIDEBAR for prenumbered the order.    Boss, you should communicate the purchase and sales clerk to make the good internal control asked to maintain the all evidence for the records even one is also missing it will create the problem to us.

Boss, you are concentrate only sign due to work load, you should check and ensure cash and inventories and assets have properly maintained and have proper records for that. once again you should not allow to access all these confidential data to every body provide security for that, if concern department employees needs training needs please ready to provide it is time for recollecting and upgrading their knowledge to do their job effectively and Efficiently.

Why i am telling there is chance of fraud, waste the company money by the concern department employee. Please check all accounting records to avoid any wrong thing happened for the company.

Thanks.                                   

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