11 A-1
a.
Control Error of Fraud Controlled
Application controls are applied when customer orders are entered by the sales order clerk. Controls the errors in delivery and billing of sales transactions.
The computer assigns numbers to sales invoices when they are prepared. Controls that sales invoices will be completed and accurate.
Monthly statements are mailed to customers Controls that sales are inputted correctly and that customer can check the sales record.
b.
Control Error or Fraud Controlled
Cash receipts are prelisted by the receptionist. Controls errors that could be made when recording cash receipts.
The accounting manager reconciles control totals generated by the accounts receivable computer program. Control embezzlement of
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11B-1
1. KCN has engaged in a strategy to sell to customers with higher credit risk.
a. Review the aged trial balance of accounts receivable with the president
b. Review confirmation exceptions for indications of disputed amounts
c. Analyze and review trends in the following relationships
i. Accounts receivable to net sales ii. Allowance for bad debts to accounts receivable iii. Bad debt expense to net sales
d. Review credit memoranda for sales returns and allowances through the last day of fieldwork to determine if an adjustment is needed to record the items as of year-end
e. Perform accounts receivable turnover
2. The officers of the company receive significant bonuses based on quarterly results
a. Select a sample of customers’ accounts for positive
In this case, there are several conspirators who is involved in the fraud receiving punishment from either SEC or federal government. Robert Levin, the AMRE executive and major stockholder, and Dennie D.Brown, the company’s chief accounting officer, were subject to the punishment in the form of a huge amount of fine by the SEC and the federal government. This punishment came from reasons. After AMRE going public, the company have the obligation to publish its financial reports but its performance did not meet expectation. The investigation by SEC shows that Robert took the first step of this scam, fearing the sharp drop of AMRE’s stock price because of the poor performance of company. He abetted Brown, to practice three main schemes to present a false appearance of profitable and pleasant financial reports. Firstly, they instructed Walter W.Richardson, the company’s vice president of data processing, to enter fictitious unset leads in the lead bank and they originally deferred the advertising cost mutiplying “cost per lead” and “unset leads” amount, so that they deferred a portion of its advertising costs in an asset account. The capitalizing of advertising expenses allowed them to inflate the net income for the first quarter of fiscal 1988. Secondly, at the end of the third and fourth quarters of fiscal 1988, they added fictitious inventory to AMRE’s ending inventory records, and prepared bogus inventory count sheets for the auditors. Thirdly, they overstated the percentage
Reviewing the trial balance for the entire year to see all transaction are accurately accounted for.
Receivables system: Five transactions were selected at random from the first three quarters of fiscal 2007 and we found that TCC’s authorization controls over bad debts and recoveries were effective. However, based on information provided by prior year 2006 audit file of the bad debt owed by Kmart and the inability to pay there should be a further investigation into the recovery of the bad debt owed by Kmart in 2007.
* Documents used: customer order, sales order, shipping document, sales invoice, sales journal, remittance advice, bank deposit list, cash receipts jornal, credit memo, sales return and allowance journal, uncollectable account authorization form, a/r master file, a/r trail balance, monthly statement
The process requires Peyton Approved to discover how much inventory is sold and what the cost of goods will result in. The process requires the business to review three forms of merchandise inventory to determine which summary benefits the business’s operational behavior. One will discover when assuming that first inventory purchased by the store is the first to be sold, it is determined that the FIFO method displays the best financial outcome for the business. During the process of updating journal entries, one must enter the information proved appropriately into the T-accounts to add the balance under each record. Once the T-accounts for transactions and adjusted transactions are balanced, the next step is to enter the information provided on the balance sheet. The balance sheet will list Peyton Approved assets, liabilities and stockholders equity after added during the T-account process (Nobles, 2014). Once the balance sheet is completed the income statement, statement of retained earnings, and closing entries can be filled with the information proved. This will give the business a full review from journal entry to closing entries of the business for the six month accounting
The purpose of this memo is to document the planning of the financial statement audit
Cases of fraud have been increasing over the years, and different agencies and authorities that have the task of subduing fraud have to get involved and put a stop to it. In the instance of which fraud has been uncovered, it is crucial to be aware of the red flags that were present in relation to fraud and associate them to the factors related to the fraud risk assessment. As Troy Gillard states in the Rd news magazine, a man that broke free after being acknowledged as suspicious when he wanted to take a loan out at the Cash Canada using a stolen ID amongst other official documents that had been stolen. It seemed that the ID and the other documents
All documents that must be rescanned after the documents are collected, indexed or verified they must be given to a supervisor. Starting Monday, July 13, when rejecting mail documents: put document, check and cover letter in an envelope, write the reason for the rejection on the envelope and place the envelope in the rejection drawer. If rejected by GIS, put the prelim sheet, document, check, and cover letter in the envelope and write the reason for the rejection on the envelope and place the envelope in the rejection drawer. The Sales Price is now on the Document Information Box, the first time you come across a document that has a price filled in, tell Linda, so we can see how it goes thru. Keep the e-recording pending screen up to
If, at year end, 2 months have elapsed, what adjusting entry do you record? 2,000 A. Prepaid Legal Expense Legal Expense 2,000 2,000 B. Legal Expense Prepaid Legal Expense 2,000 Legal Expense 3,000 C. Prepaid Legal Expense 3,000 12,000 D. Prepaid Legal Expense Cash 12,000 [10]BASIC BANK10 - COAE 010 On September 1, your firm incurs a routine $82 expense, mistakenly recording it as follows: Office Expense Accounts Payable 28 28
The application of this program will require additional accounting treatment for the $25 Referral Credit in accordance with FASB codification ASC 605-50-45-1 to 3. The company has to deal with the compliance of these ASC procedures. In addition, as use of the $25 Referral Credit by the
Trace items returned to the receiving report, taking note of quantity and date received (S‑4).
Many organizations have been in the news over the past few years due to accounting ethical breaches that have affected their customers, employees, and the general public. I searched the Internet to locate a story in the news that depicts an accounting ethical breach. I selected Krispy Kreme. I enjoy their hot donuts and was curious to learn more about how they played with the numbers. For some reason I always want to dig into the trickery behind the manipulation of financial statements.
A seven-year retention period for audits work papers, second partner review and approval, evaluation of whether internal control structure and procedures include records that accurately reflect transactions and dispositions of
d. Trace the date, check number, and amount of outstanding item – Occurrence & Completeness. (AU-C 315.A114 a.i-ii)
INTERNAL CONTROL AND FRAUD DETECTION IN THE BANKING INDUSTRY (A CASE STUDY OF GUARANTEE TRUST BANK PLC)