Which of the following would offer the best protection for a company that wishes to prevent a reoccurrence of a previously detected "lapping" problem with trade accounts receivable?
A)Segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail.
B)Segregate duties so that no employee has access to both checks from customers and currency from daily cash receipts.
C)Have customers send payments directly to the company's depository bank.
D)Request that customer's payment checks be made payable to the company and addressed to the treasurer.

Question

Quizplus · Accepted Answer

Having customers send payments directly to the company's depository bank would eliminate the possibility of lapping by the bookkeeper or any other employee handling incoming mail or customer payments. This option would provide the strongest segregation of duties and control over the cash receipts process. Option A and B only partially segregate duties and still leave room for potential lapping. Option D is not as effective as having payments go directly to the company's depository bank as checks can still be intercepted or altered before reaching the treasurer.

Which of the Following Would Offer the Best Protection for a Company