In the case of Greater Providence Deposit & Trust the organization did not have proper internal controls in place. One internal control that this organization lacked was the segregation of duties control. Effective segregation of duties is achieved when the following functions are separated Romney & Steinbert 2010): • Authorization – approving transactions and decisions. • Recording – preparing source documents, entering data, maintaining journals, ledgers, files or data bases; preparing reconciliations and performance reports. • Custody – handling cash, tools, inventory or fixed assets; receiving customer checks and writing checks on the organization’s bank.
Included with the statement was a credit memorandum of $185 indicating the collection of a note receivable for Fetter Company by the bank on October 25. This memorandum has not been recorded by Fetter. The company’s ledger showed one Cash account with a balance of $21,877.72. The balance included undeposited cash on hand. Because of the lack of internal controls, Allan took for personal use all of the undeposited receipts in excess of $3,795.51.
This means that the owner of a business should not place any personal assets on the business balance sheet. The balance sheet of the business must reflect the financial position of the business alone. Also, when transactions of the business are recorded, any personal
Print payroll registers and make sure that it shows the employee gross-to-net wages for current payroll. File it to a secure environment or if you are using a computerized system ensures that it has a password and only authorized personnel can access on it. These records must be kept for seven years. 8. Payroll Distribution.
The company is required to file the auditor's attestation report as part of the annual report”. 2. Ernst & Ernst argued that the mail rule was not relevant to its audits of First Securities since that rule only involved personal transactions on Nay and the escrow investors. Do you agree? Why or why not?
For example, one question might be, “Are customer credit limits set and modified by a credit manager with no sales responsibility?” B.) For each Yes/No question, write a brief explanation of why a “No” answers represents a control weakness. A.) Questions Yes No 1.) Are picking list quantities compared to sales orders?
As the auditor of both MHA and NYH, according to Sarbanes-Oxley Section 201, I am prohibited most non-audit services to public audit clients. Those restrictions include, but are not limited to, bookkeeping/accounting processing and valuation services. I must report of internal financial reports by performing tests and offering my opinions, but not to assist with the creation of them. By helping compile estimates for closing costs related to the decorative pillow services of NYH, I would be in violation of this ethical accounting standard. It is my responsible to uphold integrity, remain objective, and adhere to the ethical standards of the PCAOB and IESBA.
Some tests have to be properly administered to do so. The Sarbanes Oxley act of 2002, requires the CEO and CFO to certify in periodic filings with the SEC the accuracy of the financial statements and the effectiveness of the company’s internal controls over financial reporting. The outside auditor is required to audit certain companies internal controls over financial reporting on an annual basis. There are phased in compliance dates for these requirements for certain smaller company filers. Company’s in the IPO process and newly public companies are not required to provide either a management assessment or an auditor attestation report until they file their second annual report with the SEC.
3. Are the main vendors' account balances verified against the vendors' balances from their own records, at least once per year? Payroll: 1. Are employee addresses and bank account numbers (for direct deposit) checked through accounting software at periodic intervals, to determine that there are no two employees with the same bank account number (which would indicate a fake employee, also called a ghost employee)? 2.
And as far as depreciation, there really is no depreciation for cash accounting, but for accrual accounting there is depreciation, because in accrual accounting you are able to choose which method you would like to use, and with fund accounting it really pretty much depends on the type of fund whether it be debit or credit that you are operating in before you can consider depreciation as valid or not. Inventory is accounted for n all of the three types of accounting, accrual because it mainly relies on when the customer orders the inventory item from you even though the person did not pay for the item, they are still obligated by law to send you money so that you are able to recognize the purchase of the item, and in fund accounting, although some of the funds used in this method only recognize current assets and ignore long-term assets most of these funds will not have inventory, but a lot of them will. I believe that there is a difference between two of these organizations that adopted a particular accounting method this is that Accrual is a relatively complex method used, and it makes it more expensive to implement, which is the absolute complete opposite of cash flow, because cash flow is when transactions are recognized, that is only when there is an exchange of cash being made. The strengths and weaknesses of these various types of accounting methods are that the strengths are that all business that have these methods are able to keep track of all of the transactions, the products sold in their stores and the cash flow in and out of their businesses on a daily basis, and I really do not think that there are any weaknesses that come from any of these types of accounting, because to me by using each of these methods still puts money on the paycheck the only thing that could be a weakness is that if you work within a small business organization that does not