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Control Deficiency Clerks are not sufficiently senior. Limits may be set too high, leading to irrecoverable debts; or too low, leading to loss of sales. Credit should be set by a senior member of staff of sales dept. Limits should be regularly reviewed by a responsible official. For a sample of new customers review the authorisation of cr limits and ensure this was performed by a responsible official. Enquire of clerk as to who can set the limits. The numbers are not sequential. Without this it is difficult to identify the missing orders and monitor if all orders are being despatched in timely manner. This can lead to loss of customer goodwill Orders should be sequentially numbered. A sequency check should be undertaken on regular basis to identify missing orders.Reperform the control by undertaking the orders sequence check. Discuss any gaps with sales team.There is a lack of segregation of duties. Errors may not be identified on a timely basis. Also risk of fraud The role duties should be split between different individuals. If not practical, bank recs should be undertaken by another individual from finance team Review the file of bank recs to identify who prepared them. Review the log of IDs who have done postings whether these are different individuals. Discuss with fin controller which member of staff undertake the roles. (Reconciliations should be reviewed on monthly basis. Evidence review by signature on bank recs). Failing to send copy of GRN to a po dept means it is not possible to monitor unfulfilled orders. Significant level of unfulfilled orders could lead to stock outs and consequent loss of sales. If GRN is lost, it will be impossible to match the inv to proof of goods being received. This could delay paying the invoice and consequent loss of supplier goodwill. GRNs should be created in 3 parts (ordering dept, warehouse and fin dept). PO clerk should agree GRN to PO(mark as complete). Review for unfulfilled orders should regularly be undertaken and followed up with the supplier. Review the file of copy GRNs are held by the PO dept and review this matched to orders are marked as complete. Review the file of overdue unfulfilled POs and discuss them with ordering clerk. Documentation count control confirms the completeness, but does not verify the accuracy. If invoices are not input correctly, this may lead to suppliers not being paid on time or paid incorrect amount leading to overpayment or loss of supplier goodwill. Purchase ledger clerk should input invoices in batches and apply application control, such as control totals to ensure both completeness and accuracy over input of purchase invoices. Sequence check should be applied to ensure completeness of input. The audit team should utilise test data procedures to assess whether the data can be entered without the use of batch control totals. Observe the inputting of purchase invoices and identify what application controls are utilised by the clerk. If the inventory costs are not regularly valued, the risks arises that the costs are misstated as the changes in raw materials and wages inflation may not be adjusted for. This could result in inventory being over or undervalued and profits misstated. A review of all standard costs should be undertaken by a senior manager in the production dept annually. A revised standard cost should be reviewed by production director who should evidence the review. Obtain a copy of the standard cost used for inventory valuation, assess when the review was undertaken and inspect whether this was reviewed and approved by the production director. This could result in unauthorised overtime or amounts being paid incorrectly and co payroll cost increasing. All overtime should be authorised by a responsible official prior to the payment being processed. This authorisation should be evidenced in writing. Review the overtime report for evidence of authorisation and note the date this occurred to ensure this was done prior to payment of overtime. There could be omitted or fictitious employees being added to the payroll listing. So that the total payment list agrees to the payroll total, there could be erroneous or fraudulent payments being made. The fin director should on a sample basis perform the checks from HR dept staff records to payment list and vice versa to ensure payments are made are to genuine employees. The fin director should sign the payment list to evidence that checks have been undertaken Obtain a sample of payment lists and review for signature by the fin director as evidence that control is operating correctly. This could result in number of employees being swiped in present when they are not. This will result in increased payroll cost for Co The clocking in process should be supervised by a responsible official to prevent 1 individual clocking in multiple employees. A supervisor should undertake a random check of employees by reviewing who has logged in with a swipe card. Observe clocking in and out process to ensure it is supervised by a responsible official. Enquire of the supervisor if they perform a random check. Employees could be taking excessive breaks. This will result in decreased productivity and increased pay roll cost. Employees should be allocated set break times and these should be supervised by responsible official. Review the rota for break times to ensure break times are formally communicated to staff, observe dining area.The supervisor could appoint unsuitable employees and may not carry out all required procedures for new joiners. This could result in these not receiving the correct pay and relevant statutory deductions causing dissatisfaction of em. All appointment of staff, whether temp or perm should only by made by HR dept Inspect the HR procedures to ensure that appointments of staff are HR responsibility. For a sample of employees inspect the employee’s file to ensure the appropriate checks were caried out by HR prior to employment. Reports are sent after payments made. This could result in unauthorised O/T or incorrect amounts being paid, cost in All O/T should be authorised by a responsible official prior to the payment.Author’n evidenced . Inspect the O/T reports for evidence of a responsible official’s signature authorising O/T prior to the payment Production supervisor is not senior enough to determine bonuses, They could pay increased bonuses to friend etc, causing increased cost for Co Bonuses should be determined by a more senior member, such as production director and it should be communicated in writing to HR dept. Inspect the communication of bonuses to the payroll dept and ensure it is sent by a senior official. Clerk can fraudulently change the bonus amounts or input with errors, This could lead to incorrect bonuses paid and increased payroll cost. Once bonus amounts are inputted, all entries should be double checked by another member of team against written confirmation from prod supervisor to identify any errors Observe the payroll clerk inputting the bonus amounts and subsequent check against written confirmation by a different member of the team. There is a lack of segregation of duties. Payroll manager should not be able to process the changes to the payroll system as well as authorise the payments. Authorisation of bank transfer listing should be undertaken by an individual outside the payroll dept, such as finance director Inspect the payroll bank transfer listing for the authorisation signature. Ensure the signature is of a person outside the of the payroll dept and of suitable authority. Without the ID check wages could be paid to incorrect employees. This could result in increased payroll costs or dissatisfied employees if incorrect amounts are received. Payroll clerk should issue cash payments upon sight of clock card and photographic ID , as this confirms proof of identity. Observe the process of wage collection to ensure that employees can only collect their wages by showing the clock card and photographic ID Control Deficiency Allowing all employees access to the till points increases the risk of fraud and errors. In the event of cash discrepancies, it will be difficult to ascertain which employee may be responsible, as there is no way tracking who used which till Control Recommendation. Employees with cleared criminal check should be able to use tills and take customers’ payments. Each employee should have designated till and the log on code, which is required for each payment transaction. Employees could give the goods for free or undercharge for goods sold, granting unauthorised discounts. Policy that employees are unable to serve friends and family at the till points. Managers/supervisors should process this through the tills, CCTV cameras could be installed to record the daily till trans’s. In addition, regular inventory counts should be carried out to identify goods in the stores below the levels in the inventory records. It will be difficult to identify which till caused the difference and therefore which employee requires further till training or undertaken fraudulent transaction The reconciliations should be undertaken on an individual till rather than in aggregate. There is a risk that store manager could remove some of the cash and record that there was an exception on the till Cashing up process should be undertaken by 2 individuals. One should count and other record it. Any differences to the reading should be double checked to confirm they are not addition errors. . Safe is not secure as the cash sales for 1 day would be significant sum. Cash is at risk of being stolen overnight The cash should be collected by the security co, but as the store closes. Risk that the cash being misplaced or stolen. No confirmation of how much cash is returned or carried out The store manager should authorise a member of staff to obtain cash from the bank and should fully record movements in and out of the till.