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Business Accounting FINANCIAL ACCT-CONNECT

Internal control is a framework which helps the organization to control the important aspects of the business. It helps the organization to control certain things and do the work in efficient and effective manner. To Find: Violation in principle of internal control. 1. Segregation of duties. In this situation, company’s computer specialists put password protection on all systems and gives excess only to the boss which makes unnecessary burden over boss. In this situation, power of adding or deletion given to some other person and give checking power to some other. 2. Use technological control. In this situation, all tickets are generated through computer system and that system closes on Friday night which creates problem. So, company need to put some manual ticket option on Friday night. 3. Mandatory employee rotation. In this situation, company has two employees one do purchase order and payment related work another is doing receiving the merchandise. In this case, rotation of both the employees is necessary. 4. Establish responsibility In this situation, all the check related work is authorized from the owners’ system. There is difficult to alter the amount of check as per situation. So, owner must share the responsibility with some other person. 5. Split the related responsibility. In this situation, company gives responsibility of cash disbursements and bank reconciliation to the same person which makes difficult for company to put internal control there. So, company should appoint different persons in related responsibility.

Internal control is a framework which helps the organization to control the important aspects of the business. It helps the organization to control certain things and do the work in efficient and effective manner. To Find: Violation in principle of internal control. 1. Segregation of duties. In this situation, company’s computer specialists put password protection on all systems and gives excess only to the boss which makes unnecessary burden over boss. In this situation, power of adding or deletion given to some other person and give checking power to some other. 2. Use technological control. In this situation, all tickets are generated through computer system and that system closes on Friday night which creates problem. So, company need to put some manual ticket option on Friday night. 3. Mandatory employee rotation. In this situation, company has two employees one do purchase order and payment related work another is doing receiving the merchandise. In this case, rotation of both the employees is necessary. 4. Establish responsibility In this situation, all the check related work is authorized from the owners’ system. There is difficult to alter the amount of check as per situation. So, owner must share the responsibility with some other person. 5. Split the related responsibility. In this situation, company gives responsibility of cash disbursements and bank reconciliation to the same person which makes difficult for company to put internal control there. So, company should appoint different persons in related responsibility.

Solution Summary: The author explains internal control as a framework that helps the organization to control the important aspects of the business.

FINANCIAL ACCT-CONNECT

FINANCIAL ACCT-CONNECT

8th Edition

ISBN: 9781266627903

Author: Wild

Publisher: INTER MCG

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Chapter 6 Solutions

FINANCIAL ACCT-CONNECT

Ch. 6 - List the seven braod principles of internal...Ch. 6 - Prob. 2DQ Ch. 6 - Prob. 3DQ Ch. 6 - Prob. 4DQ Ch. 6 - Prob. 5DQ Ch. 6 - Prob. 6DQ Ch. 6 - Prob. 7DQ Ch. 6 - Prob. 8DQ Ch. 6 - Prob. 9DQ Ch. 6 - Prob. 10DQ

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