Question

SkyView, Inc., a small startup company, has hired you as a consultant to assess its financial systems and related processes. During your review, you learn that the company's accountant is responsible for providing general ledger access to others in the company, processing all financial transactions in the general ledger, and printing checks. The president of the company must authorize write-offs in the system, but the accountant has access to the president's username and password.

Prepare a memo to SkyView's president assessing these responsibilities in the context of segregation of duties. Also address the possibility of the accountant committing fraud.

Answer 1

Segregation of duties is very important considering the fact it helps to avoid fraud. so in this case Segregation among record keeping and custody of the records. This will help to prevent the override of management power and will help to avoid one person committing Fraud.

Write off are generally handled by the treasurer. It is not right accountant having any kind of access to the username and password of president as he also the custodian of the records.The accountant also does printing of checks. The accountant could write checks for his Personal benefits as he has access to the general ledger, the accountant can manipulate the Accounts Receivable account and related accounts so as to reconcile with what information he intends to hide. With access to the write-offs, the accountant can substitute from one of the account that selfishly benefits himself from what is rightfully an account to be written off. This hiding of anomalous transactions can clear the Accountant's tracks because bad debts could go to a dead file.

Its highly recommended that segregation of function of accountant from printing of checks and instead assign to an accounts payable clerk.