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Internal Controls Assignment

   

Added on  2019-10-31

6 Pages962 Words203 Views
1Internal ControlsName:Course Professor’s nameUniversity nameCity, StateDate of submission

2AuditStrengths and weaknesses in the internal controls of Cannon Pty LtdThe internal controls of Cannon Pty Ltd does not have clear daily operating procedures that are meant for the cash receipts. This is one of the weaknesses in the internal controls of the cash receipts. The company relies heavily on people who are the sales representatives to get cheques from customers. The problem with this is that the cheques can be easily misplaced which is a big problem to the company (Graham, 2008). Another weakness is that a lot of roles have been delegated to the credit control clerk, that means that there is no proper separation of duties. For example, after receiving the checks, she is the one who is responsible for crossing them so that they can be banked, she the enters the cheque details into the system then she prints the daily report afterwards. This means that if she makes an error, no one will be able to know that an error has been made. She also handles the banking part of it as well as preparing the bank slips.The company should delegate some of these duties to another person in the finance department to ensure that there is accuracy in the process, someone to countercheck. Another weakness is that it clearly shows that the company has not put in place measures to ensure that there is timeliness of payment by the customers. Some of the strengths of the internal control system is that the company makes daily cash receipts reports this means that the reports are always up to date.b) Implications of the weaknesses

3segregation of duties: the various duties in cheque handling should be performed by different people. There should be no instance where one person in the company handles all those duties. The implication of this weakness is that the company will deal with so many errors and also there is the risk of many more errors occurring. There is also a risk of fraudulent activities in the cash receipt system when the company allows sales representatives to receive payments on the company’s behalf. Payments in cash or cheques should be received by specific people which minimizes the risk of fraud in the company (Montgomery, 2013).The company relies on mostly manual accounting system instead of an computerized accountingsystem. The imp0lications of this weakness is that there are a lot of errors that are made by manual accounting system.Assessment of internal control for cash in Cannons cash receipt systemThe Internal Control of cash is aimed at reducing errors and losses within the Organization, comprises the following accounts. Here are some of the internal control measures you can take toreduce these errors:You must take a strict control over the collections made by the collectors, who at the end of the day they deliver the money received from the client along with uncollected bills.It comprises a whole series of administrative measures, so that certain operations are executed bytwo or more persons, with the deliberate purpose of avoiding errors, hinder eventual malicious handling and detect irregularities in time.In principle, it is relatively easy for a single person to commit fraud; but when it has to act in

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