At martinez company checks are not pre-numbered because, Ask an Expert

Management Studies

At Martinez Company, checks are not pre-numbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendor's invoice. After payment, the invoice is filed by vendor name and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills “paid,” files them by payment date, and records the checks in the cash disbursements journal. Martinez Company maintains one checking account that is reconciled by the treasurer.

Instructions

(a) List the weaknesses in internal control over cash disbursements.

(b) Identify improvements for correcting these weaknesses.

Why a good system of internal controls would be beneficial to the company?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93114724

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