The management at Sampson, Inc. understands that an effective internal control system provides many positives. Among these positives are reliable financial information that enables management to make educated decisions with an opportunity to prevent or detect errors. The internal audit staff at Sampson conducts a periodic review of the organization's accounting records in order to determine if the system for internal controls is effective.
In the latest audit, the staff found the following situations:
• Bank deposits and cash receipts do not always reconcile.
• Decisions and the actual write-offs of bad debt are performed by the same person.
• Occasional discrepancies exist between physical inventory and the perpetual inventory records.
• Adjustments to physical inventory counts and the perpetual inventory records have been observed.
• Customer refunds and credits are not unusual.
• Original source documents are missing. However, substitute copies of the original source documents are available.
• Many source documents lack appropriate management approval.
In a three- to five-page paper (not including the title and reference pages), analyze the seven situations of this case study and discuss the possible cause of the situation. Utilizing scholarly research, write appropriate recommendations to management concerning operational changes or internal control revisions that should be implemented to correct problem situations.
The paper must:
• demonstrate graduate level work including appropriate research and critical thinking skills;
• be presented as a written analysis (not a question/answer format);
• be written in a coherent manner with proper use of grammar, spelling and punctuation;
• be formatted according to APA style as outlined in the Ashford Writing Center;
• include citations and references for the text and at least two scholarly sources from the Ashford University Library.