The foreman then forged the worker’s signature on time cards and work tickets and, when giving out the checks, diverted the payroll checks drawn from the discharged worker to his own use. The most effective procedure for preventing this activity is to * (1) require written authorization for all employees added to or removed from the payroll. * (2) have a paymaster who has no other payroll responsibility distribute the payroll checks. * (3) have someone other than persons who prepare or distribute the payroll obtain custody of unclaimed payroll checks. * (4) from time to time, rotate persons distributing the payroll.
Is sensitive data encrypted while stored in the database? B.) Explanation for a NO answer 1.) Not checking the picking list to sales orders can result in wrong product or the wrong amount shipped to customers. 2.)
Legality Financial reporting activities and standards Earnings management has been used as the manipulation of the current standard of financial reporting established by G.A.A.P. Earnings management is when companies inflate their earnings or revenues. We have seen this with WorldCom who altered capital expenditures instead of expensing them. Waste Management also did this when it extended the useful life of its trash trucks. Materiality is defined by the FASB as an omission that would affect a normal person by a misstatement such as using earnings management to skew the true earnings or revenue.
In a thorough review of LJB Company’s internal controls it has been found that, although there are some practices currently in place that satisfy a few of the basic principles, there are a significant number of areas of weakness. Based on your company’s current practices and your plan to go public in the future the following internal controls are required: 1. Establishment of duties: Control is most effective when one person is responsible for a given task. As such, you will need to establish one individual to handle petty cash disbursements to employees. 2.
Revenues are recorded when cash is received and expenses are recorded when cash is payment. Cash basis does not meet the requirements of accounting principles (GAAP) for it does not recognize the revenue principle and matching principle. Accrual basis accounting method is recognized when revenue is earned, and expenses accrued. Other accounts have to be created to show the difference between and recognized revenue or expenses and the receipt of cash when disburse. Accrual basis accounting is used by the large businesses in the United States, Canada, and in most foreign countries for the statements is prepared according to the generally accepted accounting principle (GAAP).
Above all indicates some problems exist in Fit Food, Inc. financial reporting. Behind financial data managers in divisions take various “skills” to meet the assigned sales targets by data manipulations, which are not only the problems of each divisions but also the deficiency of entire control system. Reasons and Recommendations A. The deficiency of entire control system Although the company has established financial results-based control system, the system is still undeveloped and cause negative effects. Managers took gamesmanship to improve their performance indicator without producing any positive economic effects.
Likewise, in the case of bad or doubtful debts, an estimate for provision is usually done to know as to how much of the trade receivables the company might not be receiving. This provision is created to safeguard the company from the losses from debts. Given these points, estimation appears to be beneficial. However, “estimates are inherently subjective and therefore lack precision as they involve the use of management's foresight in determining values included in the financial statements” (Accounting-simplified.com, 2013). They can sometimes downsize the dependability on the
10 Questions To Ask About Secured Credit Cards gives a list of things to consider before applying for a secured credit card. There are, however, several misconceptions about these types of credit cards that are important to know before you decide to apply for a secured credit card. Myth #1: Anyone can get a secured credit card. Even though you are using your own money as collateral, you can still be declined for a secure credit card. For example, the lender that provides the secure card can still review your credit history.
As a business owner I would use accrual method only because it recognizes Receivables and payable. When using the cash basis a company can appear that it is earning profit when in fact it is loosing funds. Cash basis does not acknowledge money that is owed which make is very difficult to keep accurate records. The IRS generally requires companies to use the cash accrual basis of accounting on their tax return. The Internal revenue service does allow the cash method of accounting if certain criteria are met because tax laws change frequently it is essential to contact a CPA if a business owner decides to use cash basis of accounting.
This method I believe is more accurate in maintaining financial records at the end of the year and providing a better financial look into how a company is managing. Cash accounting is when companies record revenue only when cash has been received. Cash accounting even if the service was rendered if no cash was received the company will not record the expense. By only recording expenses when bills are paid, the company may be able to shift expenses into other periods in order to make the company look more profitable simply by manipulating when payments are made. This can make the financial statements misleading.