Explain why each of the following combinations of tasks should or should not be

Question

Explain why each of the following combinations of tasks should or should not be separated to achieve adequate internal control.

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.

Recording cash receipts in the journal and preparing the bank reconciliation.

Explanation / Answer

a)Approval of bad debt write offs recognisation of the counts receivable subsidiary ledger and the general ledger control account should not be separated because there are no conflicts which are existing between writing of debts relates to the Asset accounts which is receivable and the reconciling accounts payable which is directly related to the liability.

b) distribution of payroll checks to employees and approval of employee time cards should be separated because they are independent one another and should be separated.

c) posting of amount both the cash received and the cash disbursements journals to the general ledger does not need to be separated has no employee has the specific access to the assets which is being used in this is specific relation. hence this is specific step does not has to be separated.

d) writing checks to vendors and posting to the cash account does not have to be separated as there is a specific control over both of the cash outflows in the specific activities.

e) recording cash receipts in general and preparing bank recognisation should be separated as employee has all the access to the specific transactional assets. Allowing the employees to verify the specific accuracy of the records would directly help him to cover all the money which can be done via doctoring the recognisation of the bank.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.