6.57 Select Effective Extended Procedures. The following are some \"suspicions\"
ID: 2541741 • Letter: 6
Question
6.57 Select Effective Extended Procedures. The following are some "suspicions"; you have been requested to select some effective extended procedures designed to confirm or deny the suspicions Required: Write the suggested procedures for each case in definite terms so another person can k a. The custodian of the petty cash fund may be removing cash on Friday afternoon to pay for do. weekend activities b. A manager noticed that eight new vendors were added to the purchasing department's approved vendor list after the assistant purchasing agent was promoted to chief agent three weeks ago. She suspects all or some of them might be fictitious companies set up by the new chief purchasing agent. c. The payroll supervisor may be stealing unclaimed paychecks of employees who resigned and did not collect their last check d. Although no customers have complained, cash collections on accounts receivable have decreased, and the counter clerks may have stolen customers' payments. e. The cashier may have "borrowed" cash receipts, covering this by holding each day's deposit until cash from the next day (s) collection is enough to make up the shortage from an earlier day and then sending the deposit to the bank St plendidExplanation / Answer
Ans 1 Physical verification of cash at the end of work week and examination on each last day of work week folio of Cash Register w.r.t. opening balance, receipts, payments and closing balances can ensure if Same is happening or not. Also bringing this practice into regularity will prevent this from happening.
2. An enquiry into request for quotation file and evaluation of vendor selection criteria can ensure if the same has happened or not. generally quotations are received from three separate vendors and best amongst them is added as a vendor.
3. A no dues certificate can be sent to ex employees for signing stating about last payment check and full and final settlement to be ensured that same has happened or not. Further to curb it a full and final settlement form be signed compulsorily by each employee on termination of their services.
4. Balance Confirmations may be asked for from customers and thus the se can be compared to their ledger in books of accounts of the company to ensure that they match. Any discrepancy found can be further enquired into.
5. Physical verification of opening and closing cash for each day and examination of receipts and payments against memo's available with cashier can ensure if same has happened or not. Also it will curb the scenario.
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