Question

Question 1a.

Explain why each of the following combinations of tasks should or should not be Type (1) Separated or (2) Not Separated in all of five fields below as Part Combination of Tasks A Approval of bad debt write-offs and the reconciliation of the accounts receivable subsidiary ledger and the general ledger control account. Distribution of payroll checks to employees and approval of employee time cards Posting of amounts from both the cash receipts and the cash disbursements journals to the general ledger Writing checks to vendors and posting to the cash account. E Recording cash receipts in the journal and ppre^.riiug hu: lbaik nx:oicilizaiin.

Question 1b.

Answer 1

Answer 1 a

Response: a. This combination of tasks should be separated to achieve adequate internal control. If one single employee is to approve bad debt write-offs as well as the reconciliation of the accounts receivable subsidiary ledger on top of the general ledger control account, the employee could abuse his or her authority. That employee easily could be stealing money from customers and then write it off as a bad debt

b. This combination should be separated. If one person is in charge of approving time cards and in charge of distributing payroll checks, there could be a window to fraud. It would be too easy for the person in charge of payroll to collaborate with another to alter the number of hours worked and then both could benefit from extra, unearned cash. It is also possible to falsify time cards and cash checks via forged signature.

c. This combination of tasks can be completed by the same employee. This task does not particularly have a chance for fraud since the cash receipts and cash disbursement journals are prepared by others already. This way, if there is an error, it can easily be traced back to the same person

d. This combination of tasks should be completed with segregated duties. The possibility offraud by the employee covering both tasks is high. The employee could be falsifying checks to fake vendors and then keeping the proceeds to themselves

e. This is another combination that should be segregated. The employee could be keeping the cash receipts to themselves and never actually posting the cash receipts to the journal.

Answer 1b

a. Alphabetic check validates that letters are entered where only letters are required to be entered, e.g., employee name

b. Check digit to verify that the number is correct .

c. Missing data check, numeric check, validity check

d. Range check, reasonableness check sign check

e. Missing data check ensures that no blank fields are entered where data should be present, e.g., marital status, validity check

f. Reasonableness check, limit check. Missing data check.

g. Validity check

h. limit check, missing data check

i. Reasonableness checks validate that only data within a pre-specified range is entered, e.g., number of hours worked greater than zero and less than 70.