Which of the following statements is/are true? Statement I. The overlapping of duties of some employees might create problem with segregation of duties which is part of control environment factor of internal control. Statement II.  Failure to prelist cash receipts before they are recorded which results in problems in processing of receivables. This is a management’s philosophy and operating style concern under control environment. Statement III. The management is committed to resolve any accounting policy problems that may arise. This is because there is an active participation of those charge with governance concern under control environment. Group of answer choices All of the statements are true Statements I and II Statement II only Statements II and III

23. Shelly is an internal audit manager of Air Clean and Safe Express, Inc.  a publicly listed company, which provides general air conditioner cleaning and maintenance services to its industrial and residential customers.  This will be the first time that the company will be audited. Thus, Shelly does not have any previous working file to review. Shelly recently conducted a preliminary interview with Mr. Norvs Gorgeous, who along with his sister, Ms. May Gorgeous owns the company.

Interview with Auditee (Independent Situation)

Shelly has a moment to ask Red, the general manager, a few questions.

Shelly: Hi Red, I’m wondering if you could help me clarify some things regarding my brief observations of the accounting staff?

Red: Sure, I’d be glad to. What can I do for you?

Shelly: I got the impression from the staff that they’re not always certain about their assigned functions. Are job responsibilities clearly defined?

Red: In assigning office responsibilities, Norvs says the main considerations are that work should be done by people who are familiar with a task and who are capable of doing it. But he also admits that availability has to be a consideration. Although this does lead to some overlap in duties, it doesn’t create any confusion in responsibilities. I carefully assign the daily duties and overview each day’s accounting records. This keeps the office running smoothly and in a well-organized manner.

Shelly: The staff mentioned that they’ve occasionally had problems processing collections of trade receivables. Do you prelist cash receipts before they’re recorded?

Red: Well, we haven’t really experienced any need to. The system is set up so that we collect all of the checks at the end of the day, making it possible to record them all at one time. This way, we can be more efficient by avoiding the need to write them down twice. On those rare occasions when there is a collection processing problem, we resolve it immediately.

Shelly: Do you ever run into accounting policy problems?

Red: Not very often. I usually handle any policy problems that do arise, although Norvs will handle the situation if he feels strongly about the issue.

Which of the following statements is/are true?

Statement I. The overlapping of duties of some employees might create problem with segregation of duties which is part of control environment factor of internal control.

Statement II.  Failure to prelist cash receipts before they are recorded which results in problems in processing of receivables. This is a management’s philosophy and operating style concern under control environment.

Statement III. The management is committed to resolve any accounting policy problems that may arise. This is because there is an active participation of those charge with governance concern under control environment.