Communication Actitivy Essay

As a new auditor for the CPA firm of Croix, Marais, and scratch, you have been as pledgeed to hatfulvas the home(a) visualizes everyplace brand notes pass along of Manhattan lodge. Your review reviews the following checks are like a shot endorsed For Deposits Only, but no list of the checks is formulated by the some maven opening the mail. The mail is receptive either by the abolish or by the employee who maintains the accounts receivable records. military post utility are deposited in the curse weekly by the cashier. Instructions Write a letter to Jerry Mays, possessor of the Manhattan comp any explaining the weaknesses in essential control and your recommendations for up(a) the system. Mr. Jerry MaysManhattan fraternity nigh(a) Mr. MaysRE INDENTIFICATION OF WEAKNESSES IN INTERNAL CONTROLSAs your newly appointed auditors, Croix, Marais, and Kale (CMK or we) are mandated by the scope of our contract to review the internal controls over mail cash revenue (the exploit) of Manhattan confederation (the Company). As part of the review, we will also provide some recommendations for improving any identified weaknesses in the internal control system of the Company. The review of the process identified the following, which we will classify as weaknesses in the internal control of the system* Although checks are promptly endorsed For Deposit Only, no list of the checks is prepared by the mortal opening the mail * beam is opened by the cashier or by the employee who maintains the accounts receivable records and * Mail receipts are deposited in the bank weekly by the cashier For each of the aforementioned, we will provide an explanation of the weakness as well up as our recommendations for improvement. The checks endorsed, as For Deposit Only is a very strong internal control mechanism. The endorsement is restrictive and reduces the likelihood that someone could romp the check for personalized example, as banks will not give somebody cash w hen presented with a check that has this type of endorsement. However, a weakness of the process lies in the fact that no duplicate of the list of the checks that are standard is prepared by the person opening the mail.This is an example of a archive procedure mar in the process and aninternal control weakness. Without the conceptualization of a duplicate list as well as subscribe for the receipt of the checks, there is no trace that the event of receipt of the checks has occurred. By requiring signatures and preparing a duplicate list of the checks, the Company set up identify the person responsible for the event. To this internal control weakness, we would recommend the establishment of responsibility, where only a designated person a mail receipt clerk will be authorized to handle checks authorized via mail. The mail receipt clerk should prepare in duplicate, a list of the checks received each day and sign the list to establish responsibility for the receipt of the data. As part of the process, the captain copy of the list, along with the checks should be sent to the cashiers plane section for the preparation of the everyday cash summary.Additionally, the mail receipt clerk should charge a copy of the list to the treasurers office, if there is one for reconciliation purposes with the daily cash summary. As mentioned above, we observed that the mail is opened by the cashier or by the employee who maintains the accounts receivable records. This is a flaw in the internal control of the process related to the segregation of duties or separation of function. The cashiers office is responsible for the preparation of the daily cash summary and thus should not be the same person opening the mail of cash receipts, which is a related activity. Different individuals should be responsible for any related activity. A dishonest cashier can understate the recording of the mail cash receipts and report a different amount on the daily cash summary for personal benefits. Accordingly, we would recommend the establishment of responsibility, where only a designated person a mail receipt clerk will be authorized to handle checks received via mail.Additionally, we recommend the segregation of duties, where different individuals receive the mail cash, record the receipts and hold the cash. This will ensure that different individuals are responsible for any related activity and that the responsibility for record keeping for the cash is disrupt from the physical custody of the cash. Finally, we also observed that the cashier deposits mail receipts in the bank weekly. The internal storage of cash on the expound of the Company is not advisable for obvious reasons- theft, robbery, and unauthorized approach shot. Employees with other intentions can alert external cohorts to raid or rob the Company at night or at another time to gain access to the cash stored onthe premises.Additionally, the storage of the cash on the premises presents a working ha zard for the employees as outsiders wanting to gain access to the cash may subject them to unwanted raids. The use of a bank on a daily base of operations contributes significantly to good internal control over cash. The company can shield the cash on a daily basis by using a bank as a depository and thus minimizing the amount of currency that the Company has on hand at any point in time during the week. Additionally, the use of the bank on the daily basis facilitates the control of cash because it creates a double record of all bank transactions one by the Company and one by the bank.Also we recommend that all receipts be deposited in the bank on a daily basis versus the current practice of weekly deposits. In summary, if management implements the above recommendations, the Company will be in a better position to safeguard its assets from employee theft, robbery, and unauthorized use. Additionally, the companys accounting records will be compound in its accuracy and reliability as a result of the simplification in the risk of errors and irregularities. We are available to further discuss with Company management and hope that the recommendations will be implemented as in short as practicable. We look forward to working with management on this initiative. audienceWeygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2008). Financial accounting 2010 custom edition (6th ed.). Hoboken, NJ John Wiley & Sons.