Same Person collects daily fees and deposits the cash and files the wavier forms There should be one person (A) that has visitor fill out the forms and files them, also keeping a tally of the number each day. And a second person (B) collects the cash and deposits it into the lock box.
The accountant deposits the cash at the bank and makes the journal entry The manager at the end of the night could deposit the cash, and the next morning the accountant could make the journal entry. No one checks the number of wavier forms filled out against the amount of cash deposited The accountant should also check the amount of waiver forms filled out against the amount of cash deposited to make sure amount deposited is equal to the number of visitors paying a fee
Problem 9-15 Identify one or more control procedures (either general or application controls, or both) that would guard against each of the following errors or problems. a.) Leslie Thomas, a secretary at the university, indicated that she had worked 40 hours on her regular time card. The university paid her for 400 hours worked that week. Payroll clerk reviews all inputs before posting, and then the accounting supervisor reviews all checks for reasonableness before sending them out. b.) The aging analysis indicated that the Grab and Run Electronics Company account was so far in arrears that the credit manager decided to cut off any further credit sales to the company until it cleared up its account. Yet, the following week, the manager noted that three new sales had been made to that company—all on credit.
Computer control to disallow issuing new sales on credit to customers should be programmed into the system. c.) The Small Company employed Mr. Fineus Eyeshade to perform all its accounts receivable data processing. Mr. Eyeshade’s 25 years with the company and his unassuming appearance helped him conceal the fact that he was embezzling cash collections from accounts receivable to cover his gambling losses at the race track. Employees are required to take vacation and they should be cross-trained to cover each other’s jobs when they are out. d.) The Blue Mountain Utility Company was having difficulty with its customer payments. The payment amounts were entered directly into a terminal, and the transaction file thus created was used to update the customer master file. Among the problems encountered with this system were the application of customer payments to the wrong accounts and the creation of multiple customer master file records for the same account.
They should be matching the invoice number and account numbers; this review should catch the error. Another control is the customers reviewing their statements to make sure that they are not being over charged, ect. e.) The Landsford brothers had lived in Center County all their lives. Ben worked for the local mill in the accounts payable department, and Tom owned the local hardware store. The sheriff couldn’t believe that the brothers had created several dummy companies that sold fictitious merchandise to the mill. Ben had the mill pay for this merchandise in its usual fashion, and he wrote off the missing goods as ‘‘damaged inventory.’’ Access control to create new vendors, and vendor approval procedures is a good control. Problem 9-16 Identify one or more control procedures (either general or application controls, or both) that would guard against each of the following errors or problems. a.) A bank deposit transaction was accidentally coded with a withdrawal code. Having an input that verified what type of transaction was being inputted by personal. Also, at the end of the night count would reveal this problem because there would be extra money from the deposit in the drawer.
b.) The key-entry operator keyed in the purchase order number as a nine-digit number instead of an eight-digit number. Input controls through the database form that limits the number of digits of 8 that can be keyed in by the operator. c.) The date of a customer payment was keyed 2001 instead of 2010. Input control that checks the validity of the data keyed in. If the proper perimeters where set with the application anything that fell short would not be processed until the problem was resolved. d.) A company employee was issued a check in the amount of −$135.65 because he had not worked a certain week, but most of his payroll deductions were automatic each week. Edit programs could perform edit checks that would result in an error for negative amounts before issuing checks to employees. This is done by test of sign and the system would kick back the transaction for correction before issuing the check. Payroll deductions should never be programmed to a specific number each week because this does not allow for changes in the number of hours worked and will always result in a mistake.
e.) A patient filled out her medical insurance number as 123465 instead of 123456. Edit programs could detect this input error by matching the information with the master file if the correct perimeters were set. f.) An applicant for the company stock option plan filled out her employee number as 84-7634-21.The first two digits are a department code. There is no department 84. Edit programs could detect this input error by matching the information with the master file if the correct perimeters were set. Once it’s noticed the employee would not be able to continue until they inputted their correct employee number.
g.) A high school student was able to log onto the telephone company’s computer as soon as he learned what telephone number to call. There should be a user name and password to access any company’s computer. h.) The accounts receivable department sent 87 checks to the computer center for processing. No one realized that one check was dropped along the way and that the computer therefore processed only 86 checks. Set up a checksum to check the number of checks sent against the number of checks received. They would then realize that they are missing a check and can look for it or get another one and void out the one that was dropped.
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