You began your new job as the manager at Toy Industries during the month of Dece

Question

You began your new job as the manager at Toy Industries during the month of December. During your first month, you found several interesting issues.

While looking through the invoices, you found Invoices 213–242, 245–271, and 275–290. It appears that invoices 243, 244, 272, 273, and 274 are missing.

During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50 each.

The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month.

Business is generally brisk during the holiday season, but two weeks before Christmas there was a sudden increase in slow payments.

Part A: What kind of warning signs could be associated with these issues?

Part B: What control could you put in place regarding cash refunds mentioned in Part A (2)?

Explanation / Answer

Part A: The warning signs could be associated with these issues are that there is a lack of proper internal controls in the organisation due to which there is no proper record of cheque issued. Here the warning signs associated with these issues are that there is a missappropiation of cash also it shows that emplayees can do the theft of cash. The reason for all this happens in the firm is the lack of internal controls which is very necessary in every organisation These activities shows that there is also a big fear on the proper survival or growth of the organisation

Internal controls are the controls designed to operate the business effectively There is a also a warning sign of Big fraud associated with this. It may also show the fake transactions in the business.

Part B :-

During the month, Clerk # 3 issued $250 in refunds as compared to Clerks #1, #2, and #4 who issued less than $50 each.The daily cash receipts and bank deposits reconcile, except on Tuesdays during the month.

The control we need to put in that place that there is a proper authorisation of any senior officer On the receipts of the Refund made by the clerks so that all the refunds are propeerly checked and also we can put contol through the review of refund of every clerk at the end of month in total This also helps us in this. The control is also made in respect to this is that to maintain a proper register for the Refuds given by the clerks . There may also a provision for monetary punishment such as salary deduction of any other in case there is any lack of amount in refund made

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