Mid Term 504 Essay
The one thing that I see that the company is doing right is that one person is responsible and accountable for each important task in the accounting process. The company is in compliance with the internal control of Establishment of Responsibility. There is no significant benefit of any type to the company other than a more professional appearance with the check writing machine. It is an unnecessary cost of money. The money would be better spent on improving other internal controls such as hiring a second person for the accounting process (separation of duties).
The first and most important violation of internal control is that one person is both the controller and treasurer. This violates Segregation of Duties. One person should not be responsible for all parts of a transaction. This person can get away with fraud. The petty cash procedure is out of control. There are too many hands in it and that is not how you handle petty cash. Written notes are not generally great sources of documents, it should be receipts. This is a violation of Documentation procedures. Checks should not be left out over the weekend no one should be able to access the drawer. This is in violation Of Physical controls. The treasurer and accountant is too busy, this does not exist because there is only one