Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss the risk associated with the weakness.
The following is the description of cash disbursements system of Two Symbols Limited:
Upon receipt of the documents from accounts payable department, the cash disbursements clerk files
the documents until their payment due date. On the due date, the clerk prepares a cheque for the
invoiced amount, which is sent to the treasurer who signs it and mails back to the supplier.
The cash disbursement clerk then updates the cheque register, accounts payable ledger, and accounts
payable control account from the clerk’s terminal. Finally, the clerk files the invoice and copy of
purchase order, receiving report, cheque in the department.
Describe the internal control weakness in Two Symbols’ cash disbursements system and discuss the
risk associated with the weakness.
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