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Ais - Internal Control Analysis

In: Business and Management

Submitted By eceakaydin
Words 895
Pages 4
Student Company
Internal Control Analysis

|Process |Control Owner |Frequency |Documentation and execution |Control Review Process |


|Approval of Vendor Invoices|A/P Clerk |Weekly |A/P Clerk collects vendor invoices, records |A scanned copy of the approved vendor |
| |Purchasing Manager | |vendor invoices in the system, and gets vendor |invoices are kept in the system. Large |
| | | |invoices approved by the Purchasing Manager |invoices are periodically reviewed, other |
| | | | |invoices can be retrieved on an as needed |
| | | | |basis. |
|Printing Checks, Preparing |A/P Clerk |Weekly |A/P clerk prepares cash disbursement vouchers, |Treasurer reviews the cash disbursement |
|Cash Disbursement Vouchers | | |which includes a copy of each approved invoice.|vouchers, and weekly check run prepared by|
| | | |A/P Clerk prints the weekly check run which |the A/P clerk. |
| | | |includes the summary of the checks to be issued| |
| | | |that week. A/P clerk prints the checks for | |
| | | |signature. | |
|Signing Checks |Treasurer |Weekly |Treasurer reviews the weekly check runs, cash |Large checks require a second signature |
| | | |disbursement vouchers, signs the checks. |(CFO). Treasurer does a sanity check on |
| | | | |the check run, and inquires about any |
| | | | |unusual items. |

Student Company
Internal Control Analysis

|Process |Control Owner |Frequency |Documentation and execution |Control Review Process |


|Updating of Cash |Staff Accountant |Weekly |A/P Accountant records the cash disbursement |Each month the Cash Disbursement Journal, |
|Disbursement Journal, G/L.,|Chief Accountant |Monthly |transactions in the system, and updates the |Purchases Journal, and A/P Aging Report |
|and A/P Sub-ledger, | | |company’s books and records |are reviewed by the Chief Accountant. |
|Mailing / Disbursement of |Administrative Assistant |Weekly |Admin places checks in envelopes and mails them|Segregation of the check disbursement duty|
|Checks | | |out |introduces an additional layer of control |

Student Company
Internal Control Analysis

|Process |Control Owner |Frequency |Documentation and execution |Control Review Process |


|Depositing Checks - Lockbox|First Bank |Daily |Customers should normally send checks into the |The daily lockbox report including the |
| |Lockbox | |Lockbox at First Bank. Checks received at the |scanned copy of all checks are available |
| | | |bank are deposited into the company’s operating|to the company. Controls can be put in |
| | | |account by the Lockbox staff on a daily basis. |place to only accept payments from |
| | | | |specific customers. |
|Depositing Checks - Manual |Treasurer |Daily |Any checks mailed to the company are deposited |A deposit slip is prepared for each |
| |Administrative Assistant | |by the Treasurer into the First Bank account |transaction. Administrative Assistant |
| | | |using a scanner |collects checks and prepares Remittance |
| | | | |List . |
|Updating of Cash Receipts |Staff Accountant |Daily |Staff Accountant records cash receipts on a |Each month the Cash Receipts Journal, |
|Journal, G/L, and A/R |Chief Accountant |Monthly |daily basis using the lockbox report. Manually|Sales Journal, and A/R Sub-Ledger, A/R |
|Sub-Ledger | | |received checks can be posted less frequently |Aging Report and Bank Reconciliations are |
| | | |using the Remittance List and deposit slips. |reviewed by the Chief Accountant. |

Student Company
Internal Control Analysis

|Control |Control Owner |Frequency |Documentation and execution |Control Review Process |


|Editing Employee Master |HR Manager |As needed |Update Employee Master File to reflect the |Hiring and termination decisions, and |
|File | | |latest list of employees and compensation |salary modifications are approved by the |
| | | |information |department heads |
|Prepare Monthly Payroll |Third Party Payroll |Monthly |It would be advisable to hire a third party |A third party payroll services provider |
|Report |Company | |payroll company to help manage the payroll |adds an additional layer of control. |
| | | |process. | |
|Approve Monthly Payroll |CFO |Monthly |CFO reviews and approves the monthly payroll |CFO addresses any questions on the payroll|
|Report for Processing | | |report provided by the payroll company. |report with the HR Manager. |
|Make Payroll Funds Transfer|Treasurer |Monthly |Treasurer makes the total payroll transfer into|Any significant month-to-month changes in |
| | | |the Payroll Account |payroll can be investigated |
|Issue Payroll Checks |Third Party Payroll |Monthly |Payroll company directly deposits payroll into |Direct depositing of regular payroll |
| |Company | |employee accounts, and mails payroll stubs. |payments would eliminate the risk of |
| | | | |checks being lost in the process. |
|Recording and posting of |Staff Accountant |Monthly |Staff Accountant updates CD Journal, PR |Chief Accountant reviews postings each |
|monthly payroll |Chief Accountant | |Journal, and posts to G/L and P/R Sub-Ledger |month |

|Control |Control Owner |Frequency |Documentation and execution |Control Review Process |


|Customer Credit Check |Credit Manager |As needed |Credit Manager performs a credit check for new |Customer credit quality are reviewed |
| | | |customers using information provided by |periodically, appropriate levels of |
| | | |customers, as well as 3rd party sources, and |Allowance for Doubtful accounts are set |
| | | |establishes credit limits. |accordingly |
|Sales Order Processing |Sales Department |With each |Sales department initiates and authorizes |Customer’s credit is checked before any |
| | |customer order |customer orders |orders are placed |
|Checking of Inventory |Warehouse |With each |Warehouse receives sales order, checks |Warehouse personnel do not have the |
|Availability | |customer order |inventory for availability, and ships goods. A |ability to initiate or authorize sales |
| | | |shipment confirmation is sent to the customer. |orders. Warehouse inventory levels are |
| | | |Shipment data recorded for billing. |checked monthly by outside accounting |
| | | | |firm. |
|Billing, recording and |Billing Clerk |With each |Prepare invoice, record sales transaction in |Chief Accountant reviews postings and |
|posting of sales |Staff Accountant |customer order |the Sales Journal, posts transaction to GL and |reconciliations each month |
|transaction |Chief Accountant |or Monthly r |A/R Sub-Ledger | |

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