Situation a. Jake Bates has been an employee of the city of Elmhurst for many ye
ID: 2343347 • Letter: S
Question
Situation a. Jake Bates has been an employee of the city of Elmhurst for many years. Because the city is small, Bates performs all of its accounting duties, in addition to opening the mail and preparing bank deposits and bank reconciliations.
Requirement 1. Missing Control Characteristic:
(possible answers) :
Assignment of responsibility
Competent Personnel
Inappropriate documents
Internal Audit
Proper Authorization
Separation of Duties
Requirement 2. Possible Problem: (situation A):
Possible Answers:
Lost Profits
Lost Revenues
Theft of Cash
Requirement 3. Potential Solution: (situation A)
Possible answers :
Hire a security guard
install a surveillance camera
separate cash handling duties from accounting duties. separate bank reconciliation from other duties.
Situation b. A purchasing agent for Mark Manufacturing is responsible for buying diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work.
Requirement 1. Missing Control Characteristic: (Possible Answers): (Situation B)
Assignment of responsibility
Competent Personnel
Inappropriate documents
Internal Audit
Proper Authorization
Separation of Duties
Requirement 2. Possible Problem: (Possible Answers): (Situation B)
Lost profits due to inefficiency
Lost revenues due to low-quality work
Theft of cash or diamonds
Requirement 3. (Situation B) Potential Solution: (Possible Answers) :
Fire the purchasing agent
separate purchasing, approval, and check signing duties
Situation c.
Bailey Price owns an architectural firm. Price 's staff consists of 16 professional architects, and Price manages the office. Often her work requires her to travel to meet with clients. During the past six months, Price has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. She learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office.
Requirement 1. (Situation C) Missing Control Characteristic: (Possible Answers) :
Assignment of responsibility
Competent Personnel
Inappropriate documents
Internal Audit
Proper Authorization
Separation of Duties
Requirement 2. (Situation C) Possible Problem: (Possible Answers):
Lost revenues because of employees are neglecting regular duties
theft when the manager is out of town
Requirement 3. (Situation C) Potential Solution: (Possible Answers):
Have the owner stay in the office
Assign only a single employee to manage when owner is absent. hire a worker from a temporary agency.
Situations Jake Bates has been an employee of the city of Elmhurst for many years Because the city is small, Bates performs all of its accounting duties, in addition to opening the mail and preparing bank deposits and bank reconciliations a. b. A purchasing agent for Mark Manufacturing is responsible for buying diamonds for use in the company's manufacturing process, approving the invoices for payment, and signing the checks. No supervisor reviews the purchasing agent's work. Bailey Price owns an architectural firm. Price's staff consists of 16 professional architects, and Price manages the office. Often her work requires her to travel to meet with clients. During the past six months, Price has observed that when she returns from a business trip, the architecture jobs in the office have not progressed satisfactorily. She learns that when she is away, two of her senior architects take over office management and neglect their normal duties. One employee could manage the office c. PrintDoneExplanation / Answer
Situation A:
Missing Control Characteristic - Separation of Duties.
Possible Problem – Theft of Cash.
Potential Solution - Separate cash handling duties from accounting duties. separate bank reconciliation from other duties.
Since Jake is handling both, accounting and cash handling, he can easily commit a theft. As per principal, the two activities should belong to two different individuals.
Situation B:
Missing Control Characteristic - Proper Authorization.
Possible Problem – Theft of Cash or diamonds.
Potential Solution - separate purchasing, approval, and check signing duties
Since the agent is responsible for buying diamonds, approving invoices and signing checks without any review, he can easily commit a theft. Here, proper authorization is missing.
Situation C:
Missing Control Characteristic - Assignment of responsibility.
Possible Problem – Lost revenues because of employees are neglecting regular duties.
Potential Solution - Assign only a single employee to manage when owner is absent. hire a worker from a temporary agency.
Since Price doesn’t assign specific duties when she goes out, both the senior architects assume their responsibility to be office management.