Solved

The Following Ten Paragraphs Describe Control Weaknesses in Customer Order

Question 120

Matching

The following ten paragraphs describe control weaknesses in customer order and account management business processes. Listed below are ten controls that may help regulate the weaknesses:
Match the paragraphs with the best control to address the system weakness. You will use each letter only once.

Premises:

Responses:

Rattlesnake Wire Company's purchasing manager selected his brother-in-law as a vendor and received a kickback for providing the business.

Separation of payroll and personnel departments

Blazing Saddles Corporation ordered goods that receiving personnel stole. Receiving prepared a receiving report and sent it to accounts payable. The company unknowingly paid for the stolen goods.

Independent paymaster to distribute paychecks

The production manager at Ghost Manufacturing Company told the payroll department he had hired a new employee. On payday, the paymaster could not find the employee and upon investigation, found that the employee did not exist.

Imprest payroll bank account

Price Company's purchasing department ordered goods requested by the maintenance department by phone. When the goods arrived, the maintenance department claimed that the goods were of such poor quality they could not be used.

Vendor selected by purchasing department

Connecticut Yankee Manufacturing Company ordered goods that were never received. The company, as a matter of standard policy, paid the invoice.

Timekeeping department reconciles time cards to job time summaries

Southern Star Manufacturing Company's payroll department routinely distributed paychecks on payday. The payroll supervisor suddenly quit her job. On the next payday, the payroll department could not find employees to claim two paychecks.

Requisition form prepared by requestor

Panhandle Products Company cannot easily identify vendors, and consistently selects vendors whose goods are overpriced and whose delivery schedules are too slow for Panhandle's needs.

Receiving report signed by stores

Lone Star Production Company received goods that were never ordered. The company paid the invoice.

Vendor list approved independent of purchasing

Half Moon Manufacturing Company's production manager is unsure that the second shift employees are working all hours reported on the job time tickets.

Purchase order copy sent to accounts payable

The internal auditor of Eastern Overboard Company prepares the bank reconciliation. He has difficulty managing the large number of outstanding checks at month-end in the bank reconciliation. Most of the outstanding checks are employee paychecks.

Receiving report copy sent to accounts payable

Premises:

Rattlesnake Wire Company's purchasing manager selected his brother-in-law as a vendor and received a kickback for providing the business.

Blazing Saddles Corporation ordered goods that receiving personnel stole. Receiving prepared a receiving report and sent it to accounts payable. The company unknowingly paid for the stolen goods.

Connecticut Yankee Manufacturing Company ordered goods that were never received. The company, as a matter of standard policy, paid the invoice.

Panhandle Products Company cannot easily identify vendors, and consistently selects vendors whose goods are overpriced and whose delivery schedules are too slow for Panhandle's needs.

Lone Star Production Company received goods that were never ordered. The company paid the invoice.

Half Moon Manufacturing Company's production manager is unsure that the second shift employees are working all hours reported on the job time tickets.

Responses:

Separation of payroll and personnel departments

Independent paymaster to distribute paychecks

Imprest payroll bank account

Vendor selected by purchasing department

Timekeeping department reconciles time cards to job time summaries

Requisition form prepared by requestor

Receiving report signed by stores

Vendor list approved independent of purchasing

Purchase order copy sent to accounts payable

Receiving report copy sent to accounts payable

Correct Answer:

Premises:

Responses:

Rattlesnake Wire Company's purchasing manager selected his brother-in-law as a vendor and received a kickback for providing the business.

Blazing Saddles Corporation ordered goods that receiving personnel stole. Receiving prepared a receiving report and sent it to accounts payable. The company unknowingly paid for the stolen goods.

Connecticut Yankee Manufacturing Company ordered goods that were never received. The company, as a matter of standard policy, paid the invoice.

Panhandle Products Company cannot easily identify vendors, and consistently selects vendors whose goods are overpriced and whose delivery schedules are too slow for Panhandle's needs.

Lone Star Production Company received goods that were never ordered. The company paid the invoice.

Half Moon Manufacturing Company's production manager is unsure that the second shift employees are working all hours reported on the job time tickets.