Leslie epstein, an employe of Bormack manufacturing company, prepares journal vouchers for general ledger entries. required...

Leslie epstein, an employe of Bormack manufacturing company, prepares journal vouchers for general ledger entries.

required Discuss any potential control weaknesses and problems in this scenario

Expert Solution

Facts of the Situation: An Employee of Manufacturing company prepares JV ( Journal Voucher) for Posting in General Ledger.

Issue: Potential Control Weakness

Discussion and Conclusion: Control Weakness means control implemented is designed itself not effective to mitigate the level of risk, whereas potential is used as it attracts the potential loss from such control already placed therein.

Focus on the Potential weakness in current situation are as follow:

1. No L2 level control over such voucher (JV) it means no supervision.

2. JV require to be authenticated by preparer and other person who post entries.- ( Both are the same person)

3. Chances of posting Wrong entry / incorrect head may be chosen

4. JV shall be prepared by the person having Commerce background and suppose to be graduate with such stream to understand the same.

5. No Reconciliation of such ledger over a period of time will hit the financial statement at large because it is difficult to determine the wrong entry / amount the balance which may not hit the trail balance.

6. The Chances of Human Error is very high as not going through Maker – Checker concept.

From above it is well evident that the even after putting control of general ledger posting will be made only through JV ( Journal Voucher) is control in place but same is not effective due to above reason. Hence such control leads to potential weakness in itself.

ekkarill92 answered 2 years ago

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