1、 PAGE 12CHAPTERR 51.The knowlledge that job rrotatiion iss praccticedd and that one eemployeee mayy perfform aanotheers jjob att a laater ddate ttends to diiscourrage ddeviattions from presccribedd proccedurees. Allso, rrotatiion heelps tto dissclosee any irreggularitiees thaat mayy occuur.2.Authhor

2、iziing coomplette conntrol over a seqquencee of rrelateed opeeratioons byy one indivviduall pressents opporrtunitties ffor innefficciencyy, errrors, and ffraud. The contrrol ovver a sequeence oof opeeratioons shhould be diividedd so tthat tthe woork off eachh emplloyee is auutomatticallly cheecked b

3、y annotherr emplloyee in thhe norrmal ccoursee of wwork. A sysstem ffunctiioningg in tthis mmanner hhelps preveent errrors and iineffiicienccy. Frraud iis unllikelyy withhout ccollussion bbetweeen twoo or mmore eemployyees.3.To rreducee the possiibilitty of errorrs andd embeezzlemment, the ffunctiio

4、ns oof opeeratioons annd accountting sshouldd be sseparaated. Thus, one emplooyee sshouldd not be reesponssible for hhandliing caash reeceiptts (opperationss) andd mainntainiing thhe acccountss receeivablle reccords (accoounting).4.No. Combiining the rresponnsibillity ffor reelatedd operrationns, su

5、uch ass combbiningg the functtions of puurchassing, receiiving, and storiing off suppplies, incrreasess the possiibilitty of errorrs andd frauud.5.The contrrol prroceduure reequiriing thhat reesponssibiliity foor a ssequennce off relaated ooperattions be diividedd amonng diffferennt perrsons is viio

6、latedd in tthis ssituattion. This weaknness iin thee inteernal contrrol maay perrmit iirreguularitties. For eexample, the ttickett selller, wwhile actinng as tickeet takker, ccould admitt frieends wwithouut a ttickett.6.The respoonsibiility for mmaintaainingg the accouuntingg recoords sshouldd be ss

7、eparaated ffrom tthe reesponssibiliity foor opeeratioons soo thatt the accouuntingg recoords ccan seerve aas an indeppendennt cheeck onn operatiions.7.The indivviduall accoounts receiivablee ledgger acccountts proovide businness mmanageers innformaation on thhe staatus oof inddividuual cuustomeer ac

8、ccountss, whiich iss neceessaryy for managging ccollecctionss. Mannagerss needd to kknow wwhich custoomers owe mmoney, how much they owe, and hhow loong thhe amoount oowed hhas beeen ouutstandding.8.The majorr advaantagees of the uuse off speccial jjournaals arre subbstanttial ssavinggs in recorrd-k

9、eeeping expennses aand a reducction of reecord-kkeepinng errrors.9.a.2250；b.None10.a.250；b.111.a.Somettime ffollowwing tthe ennd of the ccurrennt monnth, oone off two thinggs mayy happpen: (1) ann overrdue nnoticee willl be rreceivved frrom Hooffmann Co., and/or (22) a lletterr willl be rreceivved f

10、rrom Hooffer Co., inforrming the bbuyer of thhe oveerpaymment. (It iis alsso posssiblee thatt the error wwill bbe disscoverred att the time of maaking paymeent iff the origiinal iinvoicce is inspeected at thhe timme thee checck is beingg writtten.)b.Thee scheedule of acccountts payyable wouldd not a

11、greee withh the balannce off the accouunts ppayablle acccount. The errorr mighht alsso be discooveredd at tthe tiime thhe invoicee is ppaid.c.Thee credditor will call the aattenttion oof thee debttor too the unpaiid ballance of $11,000.d.Thee erroor willl beccome eevidennt durring tthe veerificcatio

12、nn proccess aat thee end of thhe monnth. TThe tootal ddebitss in tthe puurchasses joournall willl be lless tthan tthe tootal ccreditts by $2,0000.12.a.No, tthe errror wwill nnot caause tthe trrial bbalance totalls to be unnequall.b.No, the sum oof thee balaances in thhe creeditorrs leddger wwill nno

13、t aggree wwith tthe baalancee of tthe acccountts payyable accountt in tthe geenerall ledgger.13.a.Cash paymeents jjournaal；b.Purchhases journnal；c.Cash paymeents jjournaald.Purrchasees jouurnal；e.Cash paymeents jjournaal14.An electtronicc formm is aa softtware windoow thaat proovidess the inputts fo

14、rr a paarticuular ttransaaction. For exampple, aa checck forrm proovidess the inputts (paayee, amounnt, daate) ffor a cash paymeent trransacction. An eelectrronic invoiice prrovidees thee inpuuts (ccustommer, aamountt soldd, iteem solld) foor reccordinng revvenuess earnned onn accountt.15.Thee use o

15、f coontrollling accouunts tto verrify tthe acccuraccy of subsiidiaryy accoounts is ussed inn a maanual systeem. Inn a coomputerizeed sysstem, it iss assuumed tthat tthe coomputeer willl acccurateely suum thee indiividuaal traansacttions in thhe subbsidiaary acccountts in deterrmininng thee aggrregat

16、e balannce. TThus, theree is nno neeed forr conttrolliing acccountts forr conttrolliing thhe acccuracy of thhe inddividuual poostinggs.16.Forr autoomatedd systtems tthat uuse ellectroonic fforms the sspeciaal jouurnalss are not uused tto reccord ooriginnal trransacctionss. Ratther, elec-troniic forr

17、ms caapturee the origiinal ttransaactionn detaail frrom ann invooice, for eexamplee, andd autoomaticcally post the ttransaaction detaiils too the approopriatte leddger aaccounnts.17.E-ccommerrce caan be used by a businness tto connduct transsactioons diirectlly witth cusstomerrs. Thhus, aan ordder c

18、aan be receiveed dirrectlyy fromm the custoomerss Inteernet inputt and cash can bbe recceivedd fromm the crediit carrd. Maany tiimes, the ccash iis recceivedd prioor to actuaally sshippiing thhe prooduct, resuultingg in aa fastter reevenuee/colllectioon cyccle. RReduciing paaperwoork thhroughhout tt

19、he cyycle aalso iimprovves thhe effficienccy of the pprocesss. Foor exaample, all of thhe acccountiing trransacctionss can be feed auttomatiicallyy fromm the initiial Weeb-bassed innputs.Ex. 511As an iinternnal auuditorr, youu woulld proobablyy disaagree with the cchangee in ppolicyy. Firrst Chharte

20、rr has some normaal bussinesss riskk assoociateed witth deffault on baank looans. One wway too helpp miniimize this is too careefullyy evalluate loan appliicatioons. LLarge loanss pressent ggreateer rissk in the eevent of deefaultt thann do ssmalleer loaans. TThus, it iss reassonablle to have more t

21、han one ppersonn invoolved in maaking the ddecision to grrant aa largge loaan. Inn addiition, loanns shoould bbe graanted on thheir mmeritss, nott on tthe baasis oof favvoritiism orr meree assoociatiion wiith thhe bannk preesidennt. Alllowing tthe baank prresideent too havee solee authhorityy to ggr

22、ant largee loanns cann leadd to tthe prresideent grrantinng loaans too frieends aand buusinesss asssociattes, wwithouut thee requireed duee diliigencee. Thiis cann resuult inn a baank beecominng expposed to veery pooor crredit riskss. Inddeed, this scenarioo is oone off the causees of savinngs annd

23、loaan andd bankk faillures of thhe passt.Ex. 522This iss an eexamplle of a fraaud wiith siignifiicant colluusion. Frauuds thhat arre perrpetraated wwith mmultipple paartiess in ddifferrent ppositiions oof conntrol make deteccting fraudd moree difficullt. Inn thiss casee, thee frauud beggan wiith ann

24、 emplloyee respoonsiblle forr authhoriziing cllaim ppaymennts. TThis iis a ssensittive ppositiion beecausee his decissions wouldd inittiate paymeents. Howevver, cclaimss woulld neeed to be auuthoriized aand veerified beforre payyment wouldd be mmade. Knowiing thhis, tthe emmployeee madde surre eacch

25、 claaim haad a pphony “victtim.” Thus, therre wass a veerifiablle stoory beehind each claimm. Onlly by trackking pphysiccal evvidencee of tthe acccidennt couuld itt be ddiscovvered that the cclaim was ffictittious. Howeever, the vvery nnaturee of tthe prrocesss was to reesolvee smalll claaims qquick

26、lly witthout excesssive contrrol. LLastlyy, corrrupt lawyeers weere brroughtt intoo the fraudd to aact ass attoorneyss for the cclaimaants. This gave the cclaimss evenn moree creddibiliity. IIn acttualitty, thhe lawwyers had ddone llegitiimate business with the ttruckiing coompany, so aall apppearee

27、d norrmal. This fraudd was discooveredd whenn the frauddulentt emplloyees bannk notticed irreggulariities in hiis bannk acccount and nnotifiied auuthoriities. As tthe saaying goes, “Folllow tthe mooney!” As a side note, the corruupt cllaims adminnistraator ffell iinto tthis bbehaviior duue to gambli

28、ngg probblems.Ex. 533Event SSound shoulld nott havee reliied onn the unusuual naature of thhe venndors and ddeliveery frrequenncy too uncoverr thiss frauud. Thhe purrchasee and paymeent cyycle iis onee of tthe moost crriticaal bussinesss cyclles too conttrol, becauuse thhe pottentiaal forr abusse is

29、 so grreat. Purchhases shoulld be initiiated by a requiisitioon doccumentt. Thiis doccumentt shouuld bee counntersiigned by a superrior sso thaat twoo peopple aggree aas to what is beeing ppurchaased. The rrequissitionn shouuld innitiatte a ppurchaase orrder tto a vvendorr for goodss or sservicces.

30、TThe veendor respoonds tto thee purcchase orderr by ddeliveering the ggoods. The goodss shouuld bee formallyy receeived usingg a reeceiviing doocumennt. Ann accoounts payabble cllerk mmatchees thee requuisitiion, ppurchaase orrder, and iinvoicce beffore aany paaymentt is mmade. Such “tripple maatchi

31、nng” prreventts unaauthorrized requeests aand paaymentss. In this case, the requeests wwere uunauthhorizeed, suuggestting tthat tthe emmployeee hadd solee authhorityy to mmake aa requuest. Seconnd, thhis emmployeee hadd acceess too the invoiices. This accesss alllowed the eemployyee too channge crri

32、ticaal chaaracteeristics of thhe invvoice to hiide thhe truue natture oof thee goodds beiing reeceiveed. Thhe invvoice shoulld havve beeen dellivered direcctly tto thee accoounts payabble cllerk tto avooid coorruptting tthe doocumennt. Thhere aappareently was nno recceivinng doccument (commmon foor

33、smaaller compaanies); thuus, onnly thhe invvoice proviided pproof of whhat waas recceivedd and to bee paidd. If theree had been a recceivinng repport, the iinvoicce couuld noot havve beeen docctoredd and gone undettectedd, beccause it woould nnot haave maatchedd the receiiving rreportt.Note too Inst

34、tructoors: TThis eexerciise iss baseed on an acctual fraudd.Ex. 544a.The most diffiicult fraudds to detecct aree thosse thaat invvolve the sseniorr manaagemennt of a commpany that is inn a coonspirracy tto commmit tthe frraud. The sseniorr manaagers hhave tthe poower tto acccess mmany pparts of thhe

35、 acccountiing syystem, whille thee normmal seeparattion oof dutties iis subbverteed by invollving many peoplle in the ffraud. In aadditiion, tthe auuthoriizatioon conntrol is suubvertted beecausee mostt of tthe auuthoriizatioon powwer reesidess in tthe seenior managgement.b.Overrall, this type of fr

36、raud ccan bee stoppped iif theere iss stroong ovversigght off seniior maanagement, suchh as aan auddit coommitttee off the boardd of ddirecttors. Indivviduall “whiistle bloweers” iin thee comppany ccan maake thheir cconcerrns knnown tto thee indeependeent orr inteernal auditors who, in tuurn, ccan i

37、nnform the aaudit commiittee. The auditt commmitteee shouuld bee indeependeent off manaagemennt andd havee the powerr to mmonitor tthe acctionss of mmanagemeent.Ex. 5551.Geneeral lledgerr accoounts: (e)；2.Subsiidiaryy ledgger acccountts: (aa), (bb), (cc), (dd)Ex. 566a.Cashh receeipts journnal；b.Cass

38、h recceiptss jourrnal；c.Generral joournall (nott a reevenuee trannsaction)d.Geneeral jjournaal；e.Cash receiipts jjournaal；f.Cash receiptts jouurnalg.Cashh receeipts journnal；h.Revvenue journnal；i.Cash receiipts jjournaal；j.Generral joournallEx. 577a.Cashh paymments journnal；b.Purchhases journnal；c.C

39、ash paymeents jjournaal；d.Generral joournalle.Geneeral jjournaal；f.Cash paymeents jjournaal；g.Purchhases journnal；h.Cassh payymentss jourrnali.Geneeral jjournaal；j.Generral joournall；k.Purrchasees jouurnalEx. 588Nov.3Proviided sservicce on accouunt; ppostedd fromm reveenue jjournaal.9Grannted aallow

40、aance oor corrrecteed errror reelatedd to ssale oof Novvemberr 3; ppostedd fromm general journnal.13Recceivedd cashh for balannce duue; poosted from cash receiipts jjournaal.Ex. 599REVEENUE JJOURNAALPAGE 8InvoiicePost.Accouunts RRec. DDr.DateNNo.Accouunt DeebiteddRef.Fees Earneed Cr.20061Mar.2512Con

41、raad Co. 7901285513Orlanndo Coo. 3102312514Drakee Inc. 5803422515Electtronicc Centtral, Inc. 250431Totall1,93005CASHH RECEEIPTS JOURNNALPAGE 12FeeesAcctss.Postt.EarneedRec.CashDateAAccounnt CreediteddRef.Cr.Cr.Dr.20061Mar.4CMI, Inc. 2402401219Drakee Inc. 5305302327Fees Earneed70703429Conraad Co. 790

42、7904531Fees Earneed40405631TTotal1101,56001,67006Ex. 51101.Geneeral lledgerr accoount: (c), (e), (h), (j), (k), (l)2.Subssidiarry leddger aaccounnt: (aa), (bb), (dd), (ff), (gg), (ii)；3.No poostingg requuired: (m)Ex. 51111.Geneeral lledgerr accoount: (b), (c), (d), (f), (g), (i), (k), (l)2.Subssidia

43、rry leddger aaccounnt: (aa), (ee), (hh)；3.No poostingg requuired: (j)Ex. 5112Feb.6Purchhased serviices, suppllies, equippment, or oother commooditiees on accountt; possted ffrom ppurchaases jjournaal.10Recceivedd alloowancee or ccorreccted eerror relatted too purcchase of Feebruarry 6; posteed froom

44、 genneral journnal.16Paiid ballance owed; postted frrom caash paaymentts jouurnal.Ex. 5114Revenuee jourrnal: (d), (i)；Cash receiipts jjournaal: (aa), (ee)Purchasses joournall: (g), (h)；Cash paymeents jjournaal: (bb), (ff)；Generral joournall: (c), (j)Ex. 51151.The Cash colummn is for ddebitss (nott c

45、reddits).2.The Otherr Accoounts colummn is for ccreditts (noot debbits).3.A beetter orderr of ccolumnns wouuld bee to pplace the OOther Accouunts CCr. coolumn to thhe lefft of the FFees EEarnedd Cr. colummn.A recoommendded annd corrrecteed cassh recceiptss jourrnal iis as folloows:CASH RRECEIPPTS JO

46、OURNALLPAGE 12DateAccounttCrediteedPost. RRef.Other aaccountts cr.Fees eaarned cr.Accountts recc. cr.Cash drr. PAGE 56Ex. 5113PURCHASSES JOOURNALLPAGE 366Other AAccounnts Drr.DateAccountt CredditedPost Reef.Accountts Payyable Cr.Cleaninng Supppliess Dr.AccounttPost Reef.Amount20071May3Industrrial PP

47、roduccts, IInc.85851212Carver Paperr Prodducts, Inc.2052052317Liquid Kleann Suppplies1701703420Fountaiin Lauundry Service70Laundryy Servvice EExp.53704531Total530460705CASHH PAYMMENTS JOURNNALPAGE 41OttherAccouuntsCheckkPost.AccouuntsPayabbleCashDateNNo.Accouunt DeebiteddRef.Dr.Dr.Cr.20071May157Liqu

48、iid Kleean Suuppliees145145128558Equippment18450450241559Founttain LLaundrry Serrvice115115452560Indusstriall Prodducts, Inc.8585563161Salarry Exppense512,90002,90006731Totall3,35003453,69557Ex. 5116a.REVENNUE JOOURNALLPAGE 1DateInvoiceeNo.Accountt DebitedPost.Ref.Accts.Rec.Dr.FeesEarnedCr.Sales TTa

49、xPayableeCr.1June161A. Soommerffeld31530015121922K. Leee1261206232133J. Kooss84804342244D. Jeeffriees1261206452655J. Kooss27326013562866K. Leee6360367309879404778(12)(41)(22)8JOURRNALPAGE 1Post.DateDDescriiptionnRef.DDebitCrediit2006June244Officce Supppliess14168Feess Earnned41160Salees Taxx Payaabl

50、e228ACCOUNTTS RECCEIVABBLE SUUBSIDIIARY LLEDGERRD. JefffriesPostt.DateIItemRef.Dr.Cr.Balannce2006June222R1126126J. Kosss2006June211R1848426RR1273357K. Lee2006June199R112612628RR163189A. Sommmerfelld2006June166R1315315b.GENERALL LEDGGERAccountts Recceivabble12Post.BalannceDateIttemRef.Dr.Cr.Dr.Cr.200

51、6June300R1987987Office Suppllies142006June244J1168168Sales TTax Paayablee222006June244J18830RR14755Fees Eaarned412006June244J116016030RR19401,1000c.1.$987 ($126 + $3557 + $189 + $3155)2.$987Chapterr 61.Mercchandiising businnessess acquuire mmerchaandisee for resalle to custoomers. It iis thee sellli

52、ng oof merrchandise, insttead oof a sservicce, thhat maakes tthe acctivitties oof a mmerchaandisiing buusinesss diffferennt froom thee activitties oof a sservicce bussiness.2.Yes. Grosss proofit iis thee exceess off (nett) salles ovver coost off mercchandiise soold. AA net loss arisees wheen opeerat

53、inng exppensess exceeed grross pprofitt. Theereforre, a businness ccan eaarn a grosss proffit buut inccur opperatiing exxpensees in excesss of this grosss proffit annd endd up wwith aa net loss. 3.a.IIncreaasec.Decreease；b.Increeased.Decreease4.Undeer thee periiodic methood, thhe invventorry records

54、s do nnot shhow thhe amoount aavailaable ffor saale orr the amounnt solld durring tthe peeriod. In ccontraast, uunder the pperpettual mmethodd of aaccounnting for mmerchaandise invenntory, eachh purcchase and ssale oof merrchanddise iis recordeed in the iinventtory aand thhe cosst of merchhandisse s

55、olld acccountss. As a ressult, the aamountt of mmerchaandisee avaiilablee for sale and tthe ammount sold are ccontinnuouslly (peerpetuually) discclosedd in tthe innventory recorrds.5.The multiiple-sstep fform oof inccome sstatemment ccontaiins coonventtionall grouupingss for revennues aand exxpensee

56、s, wiith inntermeediatee balaances, befoore cooncludiing wiith thhe nett incoome baalancee. In the ssinglee-stepp formm, thee totaal of all eexpensses iss deduucted from the ttotal of alll revvenuess, witthout interrmediaate baalancess.6.The majorr advaantagees of the ssinglee-stepp formm of iincome

57、e stattementt are its ssimpliicity and iits emmphasiis on totall reveenues and ttotal expennses aas thee deteerminaants oof nett incoome. TThe maajor oobjecttion tto thee formm is tthat ssuch rrelatiionshiips ass grosss proofit tto salles annd inccome ffrom ooperatiions tto salles arre nott as rread

58、illy detterminnable as whhen thhe mulltiple-sstep fform iis useed.7.Reveenues from sourcces otther tthan tthe prrincippal acctivitty of the bbusineess arre claassifiied ass otheer income.8.Salees to custoomers who uuse baank crredit cardss are generrally treatted ass cashh salees. Thhe creedit ccard

59、 iinvoicees reppresennting thesee salees aree depoositedd by tthe seeller direcctly iinto tthe baank, aalong with the ccurrencyy and checkks recceivedd fromm custtomerss. Salles maade byy the use oof nonnbank crediit carrds geenerallly muust bee repoorted perioodicallly too the card compaany beefore

60、 cash is reeceiveed. Thherefoore, ssuch ssales create aa receeivablle witth thee cardd comppany. In booth caases, any sservicce or colleectionn feess charrged bby thee bankk or ccard ccompanny aree debiited tto exppense accountts. 9.The date of saale ass showwn by the ddate oof thee invooice oor bil