1. Explain how a company could be the victim of fraud, even if ideal segregation of duties is enforced. [3] 2. Which, if any of the following situations represent the improper segregation of functions? SUPPORT YOUR ANSWER. [3] a) The billing department prepares the customers’ invoices, and the accounts receivable department posts to the customers’ accounts. b) The sales department approves the credit memos as the result of product returns, and subsequent adjustments to the customer accounts are performed by the accounts receivable department. c) The shipping department ships goods that have been retrieved from stock by warehouse personnel. d) The general accounting department posts to the general ledger accounts after receiving journal vouchers that are prepared by the billing department. 3. Goods are shipped to a customer, but the shipping department does not notify billing and the customer never receives an invoice. Describe a specific internal control procedure that would detect this error. [3] 4. A clerk embezzles customer payments on account and covers up the theft by making an adjustment to the accounts receivable ledger. Describe a specific internal control procedure that would prevent this fraud. [3]
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