A company employs three clerks and one purchasing manager. Their responsibilitie

Question

A company employs three clerks and one purchasing manager. Their responsibilities are as follows: Employee Responsibility Purchasing Manager Approves purchase requests before they are processed and negotiates terms with vendors. Clerk 1, Purchasing Places orders with vendors. Clerk 2, Accounts Payable Prepares payment vouchers after verifying accuracy of vendor invoices and comparing supporting documents. Clerk 3, Receiving Receives delivery of goods from vendors. Which of the following would indicate a weakness in the company's internal control? a. The Purchasing Manager frequently attends vendor events with all expenses paid by the company. b. Clerk 2 has custody of unused purchase orders. c. Clerk 1 reports to the Purchasing Manager, who has significant influence over Clerk 1’s pay and career progression. d. Clerk 3 conducts manual counts of goods received, unaware of the quantities actually ordered.

Explanation / Answer

Answer :- Option b). Clerk 2 has custody of unused purchase orders.

Explanation :- The statement mentioned in option (b) to the given question i.e., "Clerk 2 has custody of unused purchase orders" indicates the weakness in internal control system of the company.

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