Fraud. Read the article “Using Spreadsheets and Benford’s Law to Test Accounting Data,” by Mark G. Simkin in the ISACA Journal, Vol. 1, 2010, available at . Follow the in the article to analyze the following set of supplier invoices: Invoice Number Amount 2345 $7,845 2346 $2,977 2347 $1,395 2348 $3,455 2349 $7,733 2350 $1,455 2351 $6,239 2352 $2,573 2353 $1,862 2354 $1,933 2355 $7,531 2356 $4,400 2357 $5,822 2358 $7,925 2359 $2,100 Invoice Number Amount 2360 $8,256 2361 $1,863 2362 $3,375 2363 $6,221 2364 $1,799 2365 $1,450 2366 $7,925 2367 $2,839 2368 $1,588 2369 $2,267 2370 $7,890 2371 $7,945 2372 $1,724 2373 $9,311 2374 $4,719
a. Cancellation of the voucher package by the cashier after signing the check. b. Separation of duties of approving invoices for payment and signing checks. c. Prenumbering and periodically accounting for all purchase orders. d. Periodic physical count of inventory. e. Requiring two signatures on checks for large amounts. f. Requiring that a copy of the receiving report be routed through the inventory stores department prior to going to accounts payable. g. Requiring a regular reconciliation of the bank account by someone other than the person responsible for writing checks. h. Maintaining an approved supplier list and checking that all purchase orders are issued only to suppliers on that list . Item Part I - Purpose Part II – ERP System Control a. Prevent resubmission of invoices for double payment Control field in supplier invoice record to indicate the document has been used Control field in purchase order and receiving report records to indicate the document has been used to support payment. b. Prevent payment of fictitious invoices System matches all invoices to corresponding receiving reports and purchase orders Checks signed by cashier. c. Prevent unauthorized purchases. Sequence check of all purchase orders. d. Verify the accuracy of recorded amounts and detect losses. Still need to count physical inventory periodically. e. Prevent large disbursements for questionable reasons. Still need two signatures. f. Verifies that items received were placed in inventory and were not stolen. Receiving clerks enter that goods were transferred to inventory. Inventory clerks acknowledge receipt of goods via terminals. System configured so that voucher package requires that the receiving report include the acknowledgement of receipt by inventory control. g. Detect unauthorized disbursements. required. h. Ensure the purchase of quality goods and prevent violations of laws or company policies. Validity of supplier number on all purchase orders. Restrict access to the supplier master file Verify all changes to the supplier master file Restrictions on who can make changes to the supplier master file. 13.9 For good internal control, which of the following duties can be performed by the same individual?
unordered items. Schedule additional help during busy periods. Receiving department employees inform purchasing of discrepancies between quantities received and ordered greater than 5%. They may fail to do this during busy periods, resulting in failure to timely resolve problems. Configure the system to compare quantities received to quantities ordered. The system should send discrepancies exceeding a tolerable deviation directly to the purchasing manager. The identity of employees removing inventory from the storeroom is not recorded. This makes it difficult to investigate the cause of any discrepancies between recorded and actual counts of inventory. The identity of employees removing inventory should be recorded. This can be done either by swiping an ID badge or by entering a user ID in an online terminal. Accounts payable clerks can create supplier records without review and subsequently approve payments to those suppliers. This creates the possibility of fraudulent disbursements. The system should be configured to a list of all one-time suppliers. Management should review that list regularly. Accounts payable should not be able to create any new supplier records – that task should only be done by the purchasing manager. There is no indication that supporting documents in the voucher package are marked “cancelled” or “paid” after being used to issue a check. This can result in duplicate payments. The system should be configured to mark supporting documents in a voucher package as PAID when used to generate a check or EFT payment. Checks are returned to accounts payable to be mailed to suppliers. This provides an opportunity to intercept and alter a check. Checks should be mailed by the cashier or the cashier’s assistant. The treasurer, who has the ability to write checks and authorize EFT payments, also reconciles the bank account. This provides an opportunity to commit fraud and cover up the discrepancy by altering the reconciliation. Someone than the cashier or treasurer should reconcile the bank account statement. 13.12 Inc. has hired you to review its internal controls for the purchase, receipt, storage, and issuance of raw materials. You observed the following: Raw materials, consist mainly of high-cost electronic components, are kept in a locked storeroom. Storeroom personnel include a supervisor and four clerks. All are well trained, competent, and adequately bonded. Raw materials are removed from the storeroom only upon written or oral authorization by a