ACTG 440 Case 3

 ACTG 440 Case three or more Essay

Tae Woong Kwak

Instructor: Bruce Darling

ACTG 440

Case #3

Thanks: June 1st 2015

1 ) The treasurer of a little city.

a. The risk can be associated with the lack of segregation of duties as well as the potential of the treasurer to authorize the application of funds without any outside review. b. Yes, the auditor should have found out this defalcation. The defalcation would almost certainly have been discovered by performing a simple conditional test of multiplying the asset quantity (certificate of deposit) by the applicable rate of interest and evaluating it with interest cash flow. c. The business had limited segregation of duties. The treasurer would both the trading and the documenting. These actions should have recently been segregated. installment payments on your The purchasing agent of a company

a. This fraud might have diagnosed by

1 ) Determining the reason why for shortages in inventory.

2 . Tests detailed orders related to the purchase and receipt of merchandise. a few. Reviewing all major vendors using a post office container number rather than regular emailing address provided the nature of the lack of segregation. The auditor after that should attempt to verify the presence of the company. some. Using synthetic procedures to identify any unusual fluctuations in account bills and looking to explain virtually any that are substantially different than expected. b. If, perhaps the scam is materials, it should have been completely detected. Yet , there is matter here that the fraud amounted to $125, 000 annually in a company with $12, 000, 500 of total annual sales. Unless there was a systematic pattern of inventory shortages that could be directly identified which has a purchasing agent, it would be hard to detect. c. The organization acquired inadequate segregation of tasks because the purchasing agent was able to make up receiving slips. Accounts payable ought to pay accounts only within the receipt of valid receiving documents fixed by someone in the obtaining area. Regulates should limit access to these documents. Additionally , the documents should be...

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