ACC305 Excel Flowchart Project (10 points)
Required:
1. Discuss the internal control weaknesses in the flowchart. Propose recommended fixes to the situation
(you may have to involve other individuals or system controls to address the weaknesses).
It would be better if the head of the startup entity, who approves the purchases, was not the same person who receives the ordered materials. Having the same person approve the purchases and receive the materials is problematic because that individual may authorize unnecessary or excessively priced purchases and then use the ordered items for personal use. The presence of a receiving department/person would be an adequate solution to this issue.
It is good that the accounting clerk in charge of creating the check sends …show more content…
A better option than the current system would be to have the purchasing manager give the check directly to a courier to mail to the vendor. The courier could get a receipt verifying that he/she mailed the check. If followed, this procedure would ensure that only copies of important documents would be returned to the accounting clerk, thus he/she would have fewer opportunities to falsify important documents (like original copies of checks) for personal gain.
The separation of duties between the purchasing manager and the head of the startup entity such that the person placing the order (the purchasing manager) is not the same person who receives the items (the head of startup entity) is a good control. However, with only two people involved in the process of ordering and approving items, the possibility of collusion exists. This issue could be somewhat mitigated by implementing a formalized procedure regarding how vendors are selected. For example, if the purchase in question is above a certain threshold dollar amount, the company could require a request for bids from different vendors. Then,
Required:
1. Discuss the internal control weaknesses in the flowchart. Propose recommended fixes to the situation
(you may have to involve other individuals or system controls to address the weaknesses).
It would be better if the head of the startup entity, who approves the purchases, was not the same person who receives the ordered materials. Having the same person approve the purchases and receive the materials is problematic because that individual may authorize unnecessary or excessively priced purchases and then use the ordered items for personal use. The presence of a receiving department/person would be an adequate solution to this issue.
It is good that the accounting clerk in charge of creating the check sends …show more content…
A better option than the current system would be to have the purchasing manager give the check directly to a courier to mail to the vendor. The courier could get a receipt verifying that he/she mailed the check. If followed, this procedure would ensure that only copies of important documents would be returned to the accounting clerk, thus he/she would have fewer opportunities to falsify important documents (like original copies of checks) for personal gain.
The separation of duties between the purchasing manager and the head of the startup entity such that the person placing the order (the purchasing manager) is not the same person who receives the items (the head of startup entity) is a good control. However, with only two people involved in the process of ordering and approving items, the possibility of collusion exists. This issue could be somewhat mitigated by implementing a formalized procedure regarding how vendors are selected. For example, if the purchase in question is above a certain threshold dollar amount, the company could require a request for bids from different vendors. Then,