(a) Prepare a letter to Mr Bold containing your recommendations for good internal control procedures for: (i) Cheque payments (ii) Petty cash (b) Discuss the audit implications, if any, of the unwillingness of Mr Bold to participate in the cheque signing procedures and petty cash function.
Mr A Bold has recently acquired the controlling interest in Quicksand Co, which is an importer of sportswear. In his review of the organisational structure of the company Mr Bold became aware of weaknesses in the procedures for the signing of cheques and the operation of the petty cash system. Mr Bold engages you as the company's auditor and requests that you review the controls over cheque payments and petty cash. He does not wish to be a cheque signatory himself because he feels that such a procedure is an inefficient use of his time. In addition to Mr Bold, who is the managing director, the company employs 20 personnel including four other directors, and approximately 300 cheques are drawn each month. The petty cash account normally has a working balance of about $300, and $600 is expended from the fund each month. Mr Bold has again indicated that he is unwilling to participate in any internal control procedures which would ensure the efficient operation of the petty cash fund.
(a) Prepare a letter to Mr Bold containing your recommendations for good internal control procedures for:
(i) Cheque payments
(ii) Petty cash
(b) Discuss the audit implications, if any, of the unwillingness of Mr Bold to participate in the cheque signing procedures and petty cash function.
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(b) Discuss the audit implications, if any, of the unwillingness of Mr Bold to participate in the cheque signing procedures and petty cash function.
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