Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Controls pertaining to recording inventory transactions are important to assessing control risk for the existence and occurrence, completeness, valuation or allocation, and presentation and disclosure assertions for manufacturing transactions and inventories.

1. How does the auditor perform a walk through of production transactions? What documents will the auditor collect? Regarding controls, what will the auditor look for?

Documentation of the authorizations of production is provided by issuing pre-numbered production orders. In addition, a material requirements report should be prepared to show materials and parts needed and on hand
management should have controls in place to ensure that purchased raw materials quantities are appropriate for production levels. Production performance evaluation reports should be prepared to evaluate production quantities, product quality, and delivery schedules.

2. What control could be used to prevent or detect false work orders or fraudulent requisitions?

Management should limit physical access to inventories and fixed assets. In addition, access to information about inventories and fixed assets should be restricted by using access controls and compatibility tests. All internal movements of inventory through the production process should be documented by using (1) materials requisitions to authorize the release of raw materials to production, and (2) move tickets to document the movement of inventory.

In addition, the receiving department should not accept returned goods without an authorization number. Customers should be required to obtain authorization by the company in advance.

3. What control could be used to prevent or identify the taking of company inventory by the spare parts custodian?

If management fails to institute effective controls, this condition could lead to theft, pilferage, embezzlement, and corruption. When employees have knowledge of where the weaknesses are in internal controls, such as approvals of transactions and access controls over automated records, they have the opportunity to commit fraud.

As an ex, employees can bill the company for services from a nonexistent company if the accounts payable staff does not review services for completion or materials for receipt.

4. Describe a control that would prevent or identify "shell company" schemes.

Economic motive is a need for money to pay for college tuition, hospital bills, drugs, or alimony and child support. Sometimes honest people can fall into circumstances where there is an unexpected need and there appears to be no other way to solve the problem.

In addition, the inability to obtain a better lifestyle through legitimate means can lead to the motivation to commit financial crimes by persons in trusted positions.

Some companies have "ethics officers" to assist those employees who experience financial and other pressures.

5. What is a control that could prevent or identify fraudulent refunds of merchandise by employees?

The need for controls within the work environment is very critical in the operation success of the organization. One must think of every possible situation to prevent too much authority being placed under one position. Using checks and balances, a company can determine if a new control is needed or if there is a gap within the internal control process.

6. Do you think storage of source documents becomes an important factor when determining controls within an organization?

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M926292

Have any Question? 


Related Questions in Basic Finance

For this question i had been using spirit airlines 2015 10k

For this question I had been using Spirit AIrlines 2015 10k report on module 1. However, I'm a bit lost as to how to read it in terms of bonds. Can someone explain this to me?  http://ir.spirit.com/financials.cfm  Using ...

Do the assigned questions using malimash incs 2014

Do the assigned questions using Malimash, Inc.'s 2014 financial data below: Malimash, Inc. 2014 Financial Data ($ millions) Income Statement Data Sales Revenue  $7,120.00 Depreciation  $230.00 Interest Expense  $10.00 Pr ...

Question 1 the primary purpose of fundamental stock

Question 1. The primary purpose of fundamental stock valuation is to _____. eliminate stocks of those companies that are potential losers from the portfolio identify for purchase those companies that are fundamentally un ...

In each of 4 years a random sample of 100 voters different

In each of 4 years a random sample of 100 voters (different each year) are asked if they support a political party. The numbers each year who support the party are 41, 32, 35, and 33. (a) Give a 95 percent confidence int ...

Your employer provides a 401k retirement plan and matches

Your employer provides a 401(k) retirement plan and matches 100% of your contributions up to 5%. Your annual income is $54,000 and you expect to earn an annualized 8.0% return on your investment. What is the value of you ...

Choose an global industry and consider the following topics

Choose an global industry and consider the following topics: diversification, investment, management, exchange rates or currency forecasts. Which of these would be most significant to your selected industry and how would ...

1 compare and contrast the role of the forecast support

1. Compare and contrast the role of the forecast support system, forecast technique, and forecast process. 2. Compare and contrast the basic logic differentiator of time series and causal forecast techniques. Under what ...

1 why is it not surprising to learn that growth rates

1. Why is it not surprising to learn that growth rates rarely show predictable trends? 2. The book value of a firm's common equity is usually lower than the market value of the common stock. Why? Can you describe a situa ...

Assume for this question only that kenny and melissa were

Assume, for this question only, that Kenny and Melissa were married today. They went straight to Kenny's lawyer's office to execute new wills. On the way home from executing a valid will leaving all assets to Melissa, Ke ...

1 deriving from the conclusion of proposition i what is the

1. Deriving from the conclusion of Proposition I, what is the crux of M&M Proposition II? What is the natural relationship between the required returns on debt and on equity that results from Proposition II? 2. In what w ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro