The internal audit staff at Sampson conducts a periodic review of the organization’s accounting records in order to determine if the system for internal controls is effective. In the latest audit, the staff found the following situations:
The internal audit staff at Sampson conducts a periodic review of the organization’s accounting records in order
to determine if the system for internal controls is effective.
In the latest audit, the staff found the following situations:
- Bank deposits and cash receipts do not always reconcile.
- Decisions and the actual write-offs of bad debt are performed by the same person.
- Occasional discrepancies exist between physical inventory and the perpetual inventory records.
- Adjustments to physical inventory counts and the perpetual inventory records have been observed.
- Customer refunds and credits are not unusual.
- Original source documents are missing. However, substitute copies of the original source documents are available.
- Many source documents lack appropriate management approval.
Analyze the seven situations of this case study and discuss the possible cause of the situation.
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