What is a standard control over cash disbursements?
Checks should be sequentially numbered and the numerical sequence should be accounted for by the person preparing bank reconciliations.
The sequential numbering of checks provides a standard control over cash disbursements. The numerical sequence of canceled checks should be accounted for by the person preparing bank reconciliations. Physical control over blank checks should be maintained by the CFO. A major objective is to detect unrecorded and unauthorized checks.
What question would an auditor most likely include on an internal control questionnaire for notes payable?
Are direct borrowings on notes payable authorized by the board of directors?
Control is enhanced when different persons or departments authorize, record, and maintain custody of assets for a class of transactions. Authorization of notes payable transactions is best done by the board of directors.
Mailing disbursement checks and remittance advices should be controlled by the employee who
Signs the checks last.
Checks for disbursements should be signed by a responsible person in the cash disbursements department after necessary supporting evidence has been examined. This individual also should be responsible for mailing the signed checks and remittance advices.
True or False --- Preventive controls generally are more important than detective controls in EDI systems.
True ---- In general, preventive controls are more important than detective controls because the benefits typically outweigh the costs. In electronic processing, once a transaction is accepted, the opportunity to apply detective controls is often limited. Thus, preventing fraud or error is important.
For effective internal control, what function should not be the responsibility of the CFO’s department?
The CFO (chief financial officer) performs the custodianship function. For a proper separation of functions, the CFO should not perform a recording function such as data processing.