ACCT 200 Lecture 10Outline of Last Lecture I. Internal ControlsII. Fraud TriangleIII. Some objectivesIV. Sarbanes-Oxley ActV. Control EnvironmentVI. Controls of CashOutline of Current Lecture I. TermsII. Separation of DutiesIII. ReconciliationsIV. Homework 5-8V. Homework 5-10VI. Homework 5-12VII. Homework 5-13VIII. Homework 5-1IX. Homework 5-3Current LectureI. Termsa. Register tapethis is recorded as sales revenueThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.b. Cash in registerrecorded as cash on balance sheetc. Cash overrecorded as other incomed. Cash shortrecorded as other expenseII. Separation of Dutiesa. This is the biggest takeaway for internal controls. Just know that the reason for Segregation of Duties is to keep checks on employees handling money.III. Bank Reconciliationa. Bank reconciliation is to compare the bank’s balance of cash to the book’s balance of cashb. Unadjusted balance is the cash balance per bankc. Bank statementi. Note receivableadd to bookii. Service chargesubtract from bookiii. NSF (bounced check)subtract from bookd. Company Recordsi. Outstanding checkssubtract from bankii. Deposits in transitadd to bankIV. Homework 5-8a. Fraud involving senior management is very difficult to stop and would probably not be detected.b. Strong oversight of senior managers by auditing company; also should allow somewhere for whistleblowers to make reports.V. Homework 5-10a. No separation of duties; this can be fixed by separating duties or by placing a camera to record employees’ actionsVI. Homework 5-12a. $27199b. $27228c. $29 should be recorded as miscellaneous expensed. fire the employee or retrain themVII. Homework 5-13a. $14356b. $14290c. $66 recorded as “other income”d. Retrain him/herVIII. Homework 5-1a. Strengthb. Strengthc. Weakness—a supervisor should perform the reconciliationd. Strengthe. Strengthf. Weakness—need segregation of dutiesg. Weakness—bank reconciliations should be done by someone not directly dealingwith the cashIX. Homework 5-3a. Subtract from bankb. Add to bankc. Subtract from bankd. Add to booke. Add to bookf. Subtract from bookg. Subtract from bookBook BankCash per bank $40360 cash per book $30950$9275 $4320($14300) $990($450) ($1300)($75) $34885
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