Question

In: Accounting

The treasurer was misappropriating funds from the company. Upon receipt of collections in the form of...

The treasurer was misappropriating funds from the company. Upon receipt of collections in the form of cash and cheques from the collectors, the treasurer would deposit part of these funds to her own personal account.  

                           Based upon the scenario:

1. Identify at least 2 methods of audit that can be used by the auditor. Justify your answer practically for each.        

2. Explain the violations committed by the treasurer, what recommendation can you give to resolve these violations?

Solutions

Expert Solution

meathods of audit for misapporipration of cash :

1. Teaming and Ladding meathod.

2. Alternative meathod can be strictly following internal control system can able to trace the receipts and payment of cash so that work done by one person can be checked by one another person.

Due to lake of not maintaing the books of accounts,in adequate internal control system exiting in the entity

persons who are having the authority of collection of cash and checques he may find loop wholes to make misapporipration of cash and checques.

The treasures has find the same as explained above and misapporiprated te cash and checques.

This can be prevented by Strictly following the Internal Control system implenting the entity:

1. No single person should be given independent control over the entair cash collection and depositing process.

2. Reconcile the cash receipts to  deposits and general ledgar.

3. Employee can be encouraged to take leave alteast once in every year so the in the absesnce of employee can be trace the frauds that has done by him.

Required specific  authority to examine the same to avoid the misaporipration of cash and Checques.


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