Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
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Question
Chapter 6, Problem 10SE
To determine
Find the missing internal control activity in the given situations.
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Collecting Evidence in a Fraud Examination. A fraud examiner was called into a businessbecause of a suspicion of fraud. An assistant manager in a bookstore is taking books off theshelf, bringing them to the return book area, completing a customer return form, and pocketing the money. This is done late in the day when few other employees are in the store and areinvolved in closing activities that occupy them in other areas.Required:a. What are the objectives of the fraud examiner in performing a fraud examination?b. What evidence could the fraud examiner obtain that would help reach the objectives ofthe audit?c. How should the fraud examiner handle the evidence obtained?
> Exercises
E8-12 Understanding the Sarbanes-Oxley Act and identifying internal c
strengths and weaknesses
The following situations suggest a strength or a weakness in internal control.
a. Top managers delegate all internal control procedures to the accounting
department.
E8-14
Learning Objective 1
b. Accounting department staff (or the bookkeeper) orders merchandise and
approves invoices for payment.
c. Cash received over the counter is controlled by the sales clerk, who rings up th
sale and places the cash in the register. The sales clerk matches the total recorded
by the register to each day's cash sales.
d. The employee who signs checks need not examine the payment packet because be
is confident the amounts are correct.
ES
Requirements
1. Define internal control.
2. The system of internal control must be tested by external auditors. What law or
rule requires this testing?
3. Identify each item in the list above as either a strength or a weakness in internal
control, and give your…
Which of the following are examples of preventive controls? Select all that apply.
O account coding on purchase orders is checked by the computer using a table of valid
account numbers
computerized accounting system will not allow a sale to be processed if a customer has
exceeded its credit limit
O quarterly review of credit balances in accounts receivable for reasonableness
O sales manager reviews daily shipments, total sales, and sales per unit shipped
O sales invoices are priced automatically using a master pricing file
Chapter 6 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQ
Ch. 6 - Prob. 1SCCh. 6 - Prob. 2SCCh. 6 - Prob. 3SCCh. 6 - Prob. 4SCCh. 6 - Separation of duties refers to separating all of...Ch. 6 - Which of the following is not a control activity?...Ch. 6 - Prob. 7SCCh. 6 - Prob. 8SCCh. 6 - Internal auditors focus on _________ ; external...Ch. 6 - Prob. 10SCCh. 6 - Prob. 11SCCh. 6 - Prob. 12SCCh. 6 - Prob. 1SECh. 6 - Fraud triangle (Learning Objective 3) 5-10 min....Ch. 6 - Prob. 3SECh. 6 - Internal controls (Learning Objective 2) 5-10 min....Ch. 6 - Prob. 5SECh. 6 - Prob. 6SECh. 6 - Prob. 7SECh. 6 - Prob. 8SECh. 6 - Prob. 9SECh. 6 - Prob. 10SECh. 6 - Prob. 11SECh. 6 - Accounting terminology (Learning Objectives 1 4)...Ch. 6 - Prob. 13SECh. 6 - Prob. 14SECh. 6 - Prob. 1CFSAPCh. 6 - Prob. 1EIACh. 6 - Prob. 2EIACh. 6 - Prob. 3EIACh. 6 - Prob. 4EIACh. 6 - Prob. 5EIACh. 6 - Prob. 6EIACh. 6 - Case 7. Kelly Straton, a trusted employee of...Ch. 6 - Prob. 8EIACh. 6 - Prob. 1FACh. 6 - Industry Analysis Purpose: To help you understand...Ch. 6 - Prob. 1SBACh. 6 - Prob. 1WC
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- Listed below are five procedures followed by Gilmore Company.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below. Procedure IC Good or Weak? Related Internal Control Principle 1. Employees are required to take vacations. Select a weakness in internal control GoodWeak Select a control principle that is violated Independent Internal VerificationSegregation of DutiesEstablishment of ResponsibilityPhysical ControlsHuman Resource ControlsDocumentation Procedures 2. Any member of the sales department can approve credit sales. Select a weakness in internal control…arrow_forwardDetermine whether each cash receipts procedure is an internal control strength or weakness. Cash receipts 1. If a sales clerk makes an error in recording a cash sale, they can access the register's electronic record to correct the transaction. 2. One of the two employees tasked with opening mail is also the recordkeeper for the business. 3. The supervisor has access to both cash and the accounting records. 4. Receipts are given to customers for only sales that are above $20. 5. Sales clerks are not required to enter the sale in the register after each transaction. Instead, the company gives employees flexibility to enter sales at the end of the day or week. 6. The recordkeeper of cash transactions is also in charge of depositing cash receipts in the bank. Strength or Weaknessarrow_forwardListed below are five procedures followed by Gilmore Company.Indicate whether each procedure is an example of good internal control or of weak internal control. If it is an example of good internal control, indicate which internal control principle is being followed. If it is an example of weak internal control, indicate which internal control principle is violated. Use the table below. Procedure IC Good or Weak? Related Internal Control Principle 1. Employees are required to take vacations. Select a weakness in internal control GoodWeak Select a control principle that is violated Human Resource ControlsIndependent Internal VerificationEstablishment of ResponsibilityPhysical ControlsSegregation of DutiesDocumentation Procedures 2. Any member of the sales department can approve credit sales. Select a weakness in internal control WeakGood Select a control principle that is violated Segregation of DutiesDocumentation ProceduresEstablishment…arrow_forward
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