Question

What company policies or procedures would you recommend to prevent each of the following activities (refer to the lecture on internal controls).

a. A clerk in the human relations department creates a fictitious employee in the personnel computer file. When this employee's payroll check is received for distribution, the clerk takes and cashes it.

b. A clerk in the accounts receivable department steals $250 cash from a customer payment, then prepares a computer credit memo that reduces the customer's account balance by the same amount.

c. A hacker manages to break into a company's computer system by guessing the password of his friend -- Champ, the name of the friend's dog.

d. An accounts receivable clerk manages to embezzle more than $1 million from the company by diligently lapping the accounts every day for three consecutive years.

e. A computer virus on the company's local area network is traced to an individual who accidentally introduced it when he loaded a computer game onto his computer.

Make sure that you identify the issues with the internal controls and tell me how you would fix them.

Answer 1