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Which of the following situations most likely could lead to an embezzlement scheme?a. Each vendor invoice is matched with the related purchase order and receiving reportby the vouchers payable clerk who personally approves the voucher for payment.b. Access to blank checks and signature plates is restricted to the cash disbursementsbookkeeper who personally reconciles the monthly bank statement.c. Vouchers and supporting documentation are examined and then canceled by theCFO who personally mails the checks to vendors.d. The accounts receivable bookkeeper receives a list of payments prepared by thecashier and personally makes entries in the customers' accounts receivable subsidiaryledger.b. Access to blank checks and signature plates is restricted to the cash disbursementsbookkeeper who personally reconciles the monthly bank statement.
Sufficient segregation of duties should exist to prevent embezzlement (a fraudulentappropriation to one's own use of property entrusted to one's care). The cashdisbursements bookkeeper has an asset custody function. (S)he signs checks preparedby the accounts payable function after inspecting the supporting documents. (S)he thencancels those documents and mails the checks. The cash disbursements bookkeeper'saccess to blank checks and ability to reconcile the monthly bank statement areinappropriate. (S)he can perpetrate and conceal fraud.Effective internal control activities over the payroll function may includea. Preparation of payroll transaction journal entries by an employee who reports to thesupervisor of the human resources department.b. Verification of agreement of job time tickets with employee time clock card hours by atimekeeping department employee.c. Custody of rate authorization records by the supervisor of the payroll department.d. Reconciliation of totals on job time tickets with job reports by employees responsiblefor those specific jobs.b. Verification of agreement of job time tickets with employee time clock card hours by atimekeeping department employee.The total time spent on jobs should approximate the total time indicated on time clockcards. Timekeeping's comparison of these records should provide an independentcheck of the accuracy of time reported on the time clock cards.An essential procedural control to ensure the accuracy of the recorded inventoryquantities isa. Calculating unit costs and valuing obsolete or damaged inventory items inaccordance with inventory policy.b. Establishing a cutoff for goods received and shipped.c. Performing a gross profit test.d. Testing inventory extensions.b. Establishing a cutoff for goods received and shipped.A proper cutoff point for goods received and shipped assures that only goods owned bythe client are included in inventory.
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Test Prep
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15. In a well-designed internal control system, employees in the same department most likely would approve purchaseorders, and alsoA.Reconcile the open invoice file.B.Inspect goods upon receipt.C.Authorize requisitions of goods.D.Negotiate terms with vendors.Answer (D) iscorrectTo prevent or detect fraud or error in the performance of assigned responsibilities, duties are oftensegregated. Approving purchase orders and negotiating terms with vendors are part of theauthorization process performed by the purchasing department..
16.Internal control is strengthened when the quantity of merchandise ordered is omitted from the copy of the purchaseorder sent to the.
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College Accounting, Chapters 1-27
Heintz/Parry
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A receiving department should accept merchandise only if a purchase order or approval granted bythe purchasing department is on hand. A standard control is to delete the quantity from the receivingdepartment’s copy of the purchase order. If the receiving clerk does not know the quantity ordered, anindependent count is more likely.C.Purchasing agent.D.Accounts payable department.17. To provide assurance that each voucher is submitted and paid only once, an auditor most likely would examine asample of paid vouchers and determine whether each voucher is.
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18. Which of the following situations most likely could lead to an embezzlement scheme?.
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invoice, CFO, purchase orders
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College Accounting, Chapters 1-27
Heintz/Parry
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