You have just been hired as an accountant for ABC Inc.
You have just been hired as an accountant for ABC Inc. and notice several weaknesses in internal control over cash, especially in the area of segregation of duties. Your manager says not to worry about the lack of controls all of the employees are very honest.
You have just been hired as an accountant for ABC Inc. and notice several weaknesses
You have just been hire d as an accountant for ABC Inc. and notice several weaknesses in internal control over cash, especially in the area of segregation of duties.
Your manager says not to worry about the lack of controls all of the employees are very honest.
How do you think these weaknesses would effect the financial statements and what should you do to try and resolve the situation?
Please make sure you note your source in APA format and include the complete library website and document number.
Do not forget to respond to the other topic for this week.
2. Using the FASB Codification as your reference, describe the benefits and weaknesses of requiring estimates for bad debts.
As part of your explanation, also discuss alternative methods for accounting for bad debts.
Are they appropriate? Why or why not? Is one preferre d over the other?
Consequently, do not forget to respond to the other topic for this week.
More Details;
Segregation of duties in an accounting department serves as the primary defense against internal fraud.
Having employees check each other’s work may reduce errors, but simple mistakes do not reduce profit to the same degree.
Small businesses suffer disproportionately from fraud, losing an average of 5 percent of revenue, or $160,000 to internal theft.
Lastly, segregation of duties within the accounting group minimizes opportunities for employees to steal from the company.
The Triangle of Fraud
Additionally, fraud prevention experts recognize a “triangle of fraud” that creates conditions for embezzlement.
That triangle consists of financial pressure on the employee, rationalization of criminal action and opportunity to commit the crime.
Segregation of duties within the accounting department breaks the triangle at the point of opportunity.
Lastly, knowing that others review and check critical components of his work alters an employee’s perception of opportunity.
In conclusion, given the potential cost of employee fraud, an investment in steps to prevent it provides a good return.