ACC00718: Accounting Information And Processes - Australian Public Company - Accounting And Finance Assessment Answer

Subject Code: ACC00718

Accounting And Finance Assessment Answer

Assignment Task: ACC00718 Assessment Task Two requires you to read and understand a business case scenario where there are distinctly identifiable internal control weaknesses. You are required to identify these weaknesses and provide recommendations for addressing these weaknesses. Most recommendations will require approximately 50 to 100 words. ACC00718 - Assessment Task Two Scenario “A” A major Australian Public Company ran promotions advertising for a number of its products through a promotions company. The promotions company falsely inflated the number of responses it received from purchasers of the company’s product. The false number of respondents was invoiced by the promotions company to the public company resulting in the overpayment of thousands of dollars. The records kept by the promotions company were those on its computer database as well as manual batch numbers of responses to the promotions. REQUIRED   Identify five (5) procedures and checks that would have reduced the risk to the victim company? Scenario “B” You were engaged to conduct an examination on an Australian subsidiary of an American company following a discovery by the financial controller that freight and travel expenses were too high during a certain period. You have found the following: The entries posted to the general ledger were examined and it was found that whereas normal expenses would be $10,000 to $12,000 for a particular month, they were, in fact, $33,442.19. Entries posted to the freight account were checked and in some cases,  there were no corresponding invoices. Staff were frustrated in their efforts because the trade payables clerk, who was responsible for the payment of accounts and cashing of wages cheques, was either off sick or evasive when questioned. The system for the payment of accounts was that the trade payables clerk would prepare a cheque to pay an invoice and would then present the cheque with the invoice and relevant documents for signing by two authorised signatories. All company accounts were paid by cheque; the only cheques used to obtain cash were wages cheques. This would be done by stamping the reverse of the cheque with the words, ‘Please pay cash’; the trade payables clerk would then present the cheque to the bank and obtain the cash. Specimen signatures were, of course, held at the bank but they were rarely checked as the trade payables clerk was so well known to bank staff. Duplicate cheques had been issued for payment of accounts already paid by the company and cashed at the bank by the trade payables clerk. The signatures on the cheques were, in some cases, forgeries and, in other cases, genuine (obviously people were signing things without due care). A payment of $6,217.60 was used to pay a travel company for a trip for two to Tahiti — the clerk had cancelled this entry with the words, ‘OK paid by me’. When questioned, the trade payables clerk said that she had used her own cheque to pay for the travel. You checked with the travel company and found that, in fact, a company cheque had been used for the trip. You and officials of the company called in local detectives and all parties adjourned to the local police station. By this time, it was outside office hours and police were unable to contact the travel agent themselves and had no documentation to rely on to negate the clerk’s story. The clerk was released for further investigation by them, but the clerk left the country and is now living happily in Greece, $164,000 richer. Required 1) Identify and discuss which internal control could have prevented this fraud and give five (5) examples 2) Identify and discuss five (5) procedures could have alerted the auditor to the fraud?

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