Vignette 6.1 ERRONEOUS RECORD KEEPING This is it, Max-either you get our account straightened out, or we're taking our business to Sudential" This as the fourth customer in one week that had threatened Max. The large health insurance company Max worked for received hundreds of checks each day from its customers in payment of insurance premiums. Because of the routine nature of the job of keying in payments, the cash data entry clerk often got bored. His mind would wander to more scintillating topics. In the middle of the afternoon, the clerk had to really struggle just to stay awake. As a result, the clerk made many errors in entering the payments. He would transpose numbers and key in the customer codes incorrectly, causing credits to go into the wrong customer accounts. Max and other sales reps complained to top management about the mistakes in their customers' accounts. As a result, "management brought in two employees from other departments to review the customer accounts and correct the errors. However, the organization would have been much better off if management had instituted some internal controls to prevent the errors from ever happening in the first place. Thought Questions: I. What types of controls could be implemented to reduce the number of clerical errors in this situation? 2. What are some things that the company can do to alleviate the monotonous nature of data entry?
Vignette 6.1 ERRONEOUS RECORD KEEPING This is it, Max-either you get our account straightened out, or we're taking our business to Sudential" This as the fourth customer in one week that had threatened Max. The large health insurance company Max worked for received hundreds of checks each day from its customers in payment of insurance premiums. Because of the routine nature of the job of keying in payments, the cash data entry clerk often got bored. His mind would wander to more scintillating topics. In the middle of the afternoon, the clerk had to really struggle just to stay awake. As a result, the clerk made many errors in entering the payments. He would transpose numbers and key in the customer codes incorrectly, causing credits to go into the wrong customer accounts. Max and other sales reps complained to top management about the mistakes in their customers' accounts. As a result, "management brought in two employees from other departments to review the customer accounts and correct the errors. However, the organization would have been much better off if management had instituted some internal controls to prevent the errors from ever happening in the first place. Thought Questions: I. What types of controls could be implemented to reduce the number of clerical errors in this situation? 2. What are some things that the company can do to alleviate the monotonous nature of data entry?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Transcribed Image Text:Vignette 6.1 ERRONEOUS RECORD KEEPING
This is it, Max-either you get our account straightened out, or we're taking
our business to Sudential" This as the fourth customer in one week that
had threatened Max. The large health insurance company Max worked for
received hundreds of checks each day from its customers in payment of
insurance premiums. Because of the routine nature of the job of keying in
payments, the cash data entry clerk often got bored. His mind would
wander to more scintillating topics. In the middle of the afternoon, the clerk
had to really struggle just to stay awake. As a result, the clerk made many
errors in entering the payments. He would transpose numbers and key in
the customer codes incorrectly, causing credits to go into the wrong
customer accounts.
Max and other sales reps complained to top management about the
mistakes in their customers' accounts. As a result, "management brought in
two employees from other departments to review the customer accounts
and correct the errors. However, the organization would have been much
better off if management had instituted some internal controls to prevent
the errors from ever happening in the first place.
Thought Questions:
I. What types of controls could be implemented to reduce the number of
clerical errors in this situation?
2. What are some things that the company can do to alleviate the
monotonous nature of data entry?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education