Amy Farrah Fowler was just elected as Auditor of Big Bang County and has started her first day in the office. Amy is getting introduced to all the employees and figuring out who does what. Penny is the payroll clerk, Sheldon is the settlement clerk, and Leonard is responsible for claims. Everyone has been very welcoming and friendly. The first few months pass really quickly and Amy is really getting an understanding of how the office flows and what needs to be done. As Amy get more and more familiar with the computer system she quickly realizes that it would be more efficient if all the claims and supporting documentation were scanned into the system for easy accessibility. The claims are now put together by Leonard and submitted to Amy for review and her signature before being placed on the docket for the Commissioners signature of approval. She researches products that would work with her existing software and finds a suitable match and presents it to the commissioners who approve to enter into a contract with the software vendor. The vendor comes in and sets up the new system and within two months they are soaring right along with all indications that everything is working properly. Two years later it is time for their annual audit that would cover the time period of the purchase of the new software. The auditors are in asking questions about the internal control procedures on disbursements. Amy informs them that they have implemented a new scanning procedure and how the Commissioners approve the docket. The auditors pull a sample of the claims and realize that when the software was implemented Amy stopped signing the claims because them became digital. Amy received a finding on compliance and internal control. Questions: 1. Where is the internal control issue? 2. What could have been done differently? 3. What internal controls could have been put into place?
Amy Farrah Fowler was just elected as Auditor of Big Bang County and has started her first day in the office. Amy is getting introduced to all the employees and figuring out who does what. Penny is the payroll clerk, Sheldon is the settlement clerk, and Leonard is responsible for claims. Everyone has been very welcoming and friendly.
The first few months pass really quickly and Amy is really getting an understanding of how the office flows and what needs to be done. As Amy get more and more familiar with the computer system she quickly realizes that it would be more efficient if all the claims and supporting documentation were scanned into the system for easy accessibility. The claims are now put together by Leonard and submitted to Amy for review and her signature before being placed on the docket for the Commissioners signature of approval.
She researches products that would work with her existing software and finds a suitable match and presents it to the commissioners who approve to enter into a contract with the software vendor. The vendor comes in and sets up the new system and within two months they are soaring right along with all indications that everything is working properly.
Two years later it is time for their annual audit that would cover the time period of the purchase of the new software. The auditors are in asking questions about the internal control procedures on disbursements. Amy informs them that they have implemented a new scanning procedure and how the Commissioners approve the docket. The auditors pull a sample of the claims and realize that when the software was implemented Amy stopped signing the claims because them became digital. Amy received a finding on compliance and internal control.
Questions:
1. Where is the internal control issue?
2. What could have been done differently?
3. What internal controls could have been put into place?
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