Discuss the internalcontrol weaknesses and risk associated with olive limitedRichard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchaseorders, sales invoices and suppliers' invoices to prepare journal vouchers for general ledger entries.Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At theend of each month, he reconciles the subsidiary accounts to their control accounts in the generalledger to ensure they balance.Discuss the internal control weaknesses and risks associated with the above process.

The given question deals with the internal control behavior and its system of the company. Internal…

Answered: Discuss the internalcontrol weaknesses…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In the evaluation of sales transaction processing and control design in the following information:(a)identify two or three potential weaknesses. breifly explain the potential mistatement, recommended correction and possible weakness of all two or three potential weaknesses identified. ORDER APPROVAL In Marco Appliance Inc., Every few minutes (immediately if things are slow), one of the salesclerks hand-carries the pending requisitions to Dakota Amalia, the controller. The secretary presents them to Ms. Amalia who approves them either immediately, based on first-hand knowledge of the customer's credit record, or after reviewing the customer's account record on her PC. Ms. Amalia initials the requisition to indicate approval of the sale and enters an approval for the requisition in the accounting system. When Ms. Amalia enters her approval code, the system creates and prints three copies of a sales order form; assigns a sequential number to it; and moves the sales order record in the…
Paul Williams recently joined XYZ2 Limited as the head of the accounting department. Williams spent the first few weeks analysing the account information system. Based on this analysis, Williams is concerned about the purchase system of XYZ2 Limited. Here are the details of the purchase system. The purchasing agent of XYZ2 Limited periodically checks inventory levels from a computer terminal connected to a central accounting system. The agent searches the inventory file for items that need to be ordered. He then selects a supplier, prints a hard copy of the purchase order, and mails it to the vendor. The clerk files one copy of the PO in the department and sends a second copy to the AP Clerk. When the inventories arrive at the receiving department, a receiving clerk reconciles the items with the packing slip, inspects them for condition, and manually prepares a three-part receiving report. The clerk sends one copy to the purchasing department to close out the open PO, files one copy…
Internal controlsJimmy Pace has recently been hired as the manager of Jittery Jon'sCoffee Shop. Jittery Jon's Coffee Shop is a national chain of franchisedcoffee shops. During his first month as store manager, Jimmyencountered the following internal control situations: a. Jittery Jon's Coffee Shop has one cash register. Prior to Jimmy'sjoining the coffee shop, each employee working on a shift wouldtake a customer order, accept payment, and then prepare theorder. Jimmy made one employee on each shift responsible fortaking orders and accepting the customer's payment. Otheremployees prepare the orders.b. Because only one employee uses the cash register, that employeeis responsible for counting the cash at the end of the shift andverifying that the cash in the drawer matches the amount of cashsales recorded by the cash register. Jimmy expects each cashier tobalance the drawer to the penny every time no exceptions.c. Jimmy caught an employee putting a case of 1,000 single-servingtea bags in…
Lamar LLC is in the process of updating its revenues and receivables systems with the implementation of new accounting software. James Loden, Inc. is an independent information technology consultant who is assisting Tamar with the project. James has developed the following checklist containing internal control points that the company should consider in this new implementation: Will customer orders be received via the Internet? Are all collections from customers received in the form of checks? Are product quantities monitored regularly?
immy Pace has recently been hired as the manager of Jittery Jon’s Coffee Shop. Jittery Jon’s Coffee Shop is a national chain of franchised coffee shops. During his first month as store manager, Jimmy encountered the following internal control situations:a.Jittery Jon’s Coffee Shop has one cash register. Prior to Jimmy’s joining the coffee shop, each employee working on a shift would take a customer order, accept payment, and then prepare the order. Jimmy made one employee on each shift responsible for taking orders and accepting the customer’s payment. Other employees prepare the orders.b.Because only one employee uses the cash register, that employee is responsible for counting the cash at the end of the shift and verifying that the cash in the drawer matches the amount of cash sales recorded by the cash register. Jimmy expects each cashier to balance the drawer to the penny every time—no exceptions.c.Jimmy caught an employee putting a case of 1,000 single-serving tea bags in her car.…
Is it an entity inherent risk for the information below? A computer network and personal computers support Marco Inc's accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. If it is an inherent risk, what is the feature of the firm that will possibly affect inherent risk and explain how and why; that is whether it increases or decreases inherent risk. Please address a specific risk to the accuracy of the financial statements with the "how" and whether…
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