Running head: ASSIGNMENT 5: COMMUNICATION ACTIVITY
THE MANHATTAN COMPANY

Jerry Mays

The Manhattan Company

1234 Bourbon Street

New Orleans, LA 27809

Dear Mr. Mays,

An audit of your financial records cash receipts and deposit procedures, We at Croix,

Marais, and Kale have found the following weaknesses in your internal controls over

cash receipts. We are listing the weaknesses discovered along with suggested

improvements.

Weaknesses

1. Cash deposits are made on a weekly basis. This makes the receipts vulnerable

to robbery and misappropriations. Checks aren’t deposited in a timely manner with

this system.

2. A cashier or accounts receivable records keeper is opening mail. Under this

system there is no segregation of duties, no assignment of responsibility, and no one

is held accountable. Also, collections can be misappropriated. The cashier shouldn’t

be in control of the funds from the time received until the time of deposit.

3. No reconciliation is made for check receipts and checks deposited. With no

reconciliation report, you can’t verify that all in coming checks where forwarded to

the cashier’s department and you can’t make sure all checks where entered correctly.

This system can cause incorrect balances and totals to be listed in accounts.

4. List of checks are not made. With no list of checks, you can’t verify if a check

was entered incorrectly. Also, you can’t verify what checks where deposited. You

have nothing to compare to a receipt if the bank say’s there are errors or missing

checks.

The following suggested improvements should be implemented to improve your check receipts and deposits systems.

Suggested Improvements

1. One individual from the accounts receivable department should be responsible for

reconciling the check deposited with the list of check receipts.

2. An employee other than a cashier or accounts receivable clerk should be assigned

the responsibility of opening the mail.

3. Deposits should be intact and made on a daily basis.

4. Before the checks are handed over to a cashier for deposit, a check receipt list

should be created.

5. The above suggestions if you choose to implement should be supervised by a

higher authority upper management.

We hope the following information will help to improve your internal control of cash.

We are available to discuss the suggestions and implementation procedures at your

convenience.

With regards

Yours sincerely

Croix, Marais, and Kale

Certified Public Accountants