You would need to include all employees who handle cash on the application. They would go through screening by the insurance company and be held legally responsible for any misuse of funds found. You should establish vacation requirements and rotation of duties. You could have a part-time accountant be required to fill for both the accountant and the treasurer whenever they are out on some required vacation. LBJ Company is handling the physical control of payroll checks accurately as all checks are being safely secured in
Review the changes that made for accuracy. If there are any discrepancies occur, make sure to solve it immediately before proceeding to processing. 4. Payroll Processing. Compute the hours that need to be paid from the timesheets into the system.
The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
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.
True/False Questions 1. The usual starting point in budgeting is to make a forecast of net income. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1,9 Level: Easy 2. A budget committee helps provide consistency in the budgeting process because it prepares all of the budgets for the various segments of the organization. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3.
The accounts are assessed base in accordance with the generally accepted accounting principles (GAAP) to ensure they are represented fairly. Tests of Controls The test of controls purpose for the acquisition and payments cycle is for the detection of understatements. Tests of controls for this cycle would include: 1. Verify that correct documents (purchase order, purchase requisition and vendor’s invoice) are prepared and attached to the voucher and examined for existence when submitted to appropriate departments. 2.
Accrual Basis vs. Cash Basis Accounting ACC 290 Accrual Basis vs. Cash Basis Accounting Cash basis and accrual basis accounting are two principle accounting methods used for keeping track of the income and expenses related to a business. When using the cash basis method, the income is not recorded until actual cash or payment is received and expenses are also not recorded until they are actually paid for. On the other hand when using the accrual basis method, transactions are recorded as soon as the order is made or services rendered, regardless if payment is actually received at the time. The main difference between these two methods is the timing in which the transactions are debited and credited to accounts (Kimmel, Weygandt, & Kieso, 2009). There are certain criteria to consider when deciding which method of accounting should be used for a business.
Discuss how Greater Providence Deposit & Trust might improve its control procedures over the disbursement of loan funds to minimize the risk of this type of fraud. In order for any organization to avoid any type of fraud would be to have good internal controls in place. Good internal control requires that no single employee be given too much responsibility over business transactions or processes (Romney & Steinbert 2010). An employee should never be given the opportunity to be in a position to commit and conceal fraud. In the case of Greater Providence Deposit & Trust the organization did not have proper internal controls in place.
Variable costing does not include production volumes and income changes because of sales volume. Although there are several pros and cons to each costing system, we will discuss those in variable costing next because it is the system discussed by the executive committee. The company’s controller approved of Silver’s suggestion and stated that the system would eliminate the time-consuming effort of allocating fixed overhead to individual products as well as eliminating the ensuing arguments. This would allow the overhead costs to be fixed and consistent each month making the costs independent of production. Segregating the cost of materials, direct labor, and variable overhead from fixed overhead costs, management’s cost control efforts would be enhanced.
2 Keep all receipts that you use petty cash for; it is vital that you have a record for auditing purposes. Because petty cash is to be used for business, it will have to be accounted for during tax time. 3. 3 Write the new balance on the front of the envelope each time you use petty cash, and place receipts in the same envelope as the cash. 4.