Chapter 6 Select Solutions

Multiple choice:

1.

2.

3.

4.

5.

6.

7.

8.

9.

10. C

TRV CLASSICS. (MANUAL AND STAND-ALONE COMPUTER

PROCESSING)
a, b, see following pages.
c, Uncontrolled Risks

Payroll
1.
Payroll Fraud is possible because employees prepare time
cards manually without a time stamp from a timekeeping clock.

2. Absence of personnel action forms allows invalid time cards to

be submitted.
3. Financial assets are at risk because AP authorizes payments
and writes checks.
4.
GL records may be inaccurately prepared because of current
accounting procedures.
Fixed Assets
1.
Unnecessary fixed assets may be ordered because requests
for fixed assets are informally submitted.
2.
The firm may pay for assets that are incorrect, damaged, or
not actually received because the receiving process is flawed.
3.
Financial assets are at risk because AP authorizes payments
and writes checks.
4.
Accounting records may be in error because the open PO is
not closed when goods arrive

d. Physical Controls

Payroll
1.
Transaction authorization. Should use personnel action form
to identify valid employees.
2.
Transaction authorization. Should employ a formal
timekeeping function.
3.
Segregation of duties. AP should not perform Cash
Disbursement department function of check writing.
4.

GL should receive approved journal vouchers.

Fixed Assets
1. Accounting Records Implement formal procedures and
documents to authorize asset purchases.
2. Accounting Records Purchasing should receive a copy of the
receiving report to close the open PO.
3.

Implement a formal receiving department with blind copy PO

4. Segregation of duties. AP should not perform Cash

Disbursement department function of check writing.

IT Controls

Limit tests,
Validation controls,
Password control over access to computers
Error Messages
File backup
Automated posting to accounts