领航教育│商科补习 ACCG101 Tutorial
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QUESTION 8
The following internal control principles apply to both the sales and receivables cycle
and the purchases and payments cycle.
Establishment of responsibility.
Segregation of duties.
Documentation procedures.
Physical, mechanical and electronic controls
Independent internal verification.
With regard to both the sales and receivables cycle, it is important to ensure
that each employee is authorised to carry out their task and has the required
skills to do so. For example, the warehouse clerk needs to have the authority
to fill a customer order and to update the inventory records. It is important to
also ensure there is segregation of duties. So in the sales and receivables cycle
it would be important to have different personnel recording the sale and filling
and despatching the sales order. It would also be important to have another
staff member, say within the accounting department, sending the invoice to the
customer. It is important to have documented procedures in place, for
example, a requirement that the warehouse clerk signs the sales order to
confirm that the goods have been despatched. This will ensure that the sales
order does not get filled twice and also enables identification of the person who
filled the order. Many businesses will also have security for their inventory such
as allowing only authorised personnel in to the warehouse and many would
also have security cameras as recall inventory is an important asset for the
business. Internal auditors will also perform checks within the business to
ensure the process is being followed correctly.
With regard to the purchases and payments cycle, again, it is important to
ensure that staff are appropriately trained and have the responsibility to carry
out each of their assigned tasks. For example, the warehouse clerk needs to
know when to re-order stock when stock levels are low and how to fulfil the
completion of the customer order. Related activities also need to assign to
different personnel. For example, the purchasing clerk will place the order for
goods, whilst the warehouse clerk will receive the goods and ensure that the
goods match the order. This latter task, that is, of checking that the goods
ordered has been received is an example of independent internal verification.
Further segregation is required in this cycle with regard to payment for the
goods; we would expect an accounts payable clerk to pay the supplier and not
personnel within the warehousing department. Goods are kept in the
warehousing department and the accounting records are in the accounts
payable department. This is an important internal control to safeguard the
inventory. Note that within this cycle there is also a requirement for the
warehousing clerk to sign the delivery docket confirming the receipt of goods
ordered an example of a documented procedure.
QUESTION 9
A subsidiary ledger is a group of accounts with a common characteristic.
The accounts are assembled to facilitate the accounting process by
freeing the general ledger from details concerning individual balances.
The advantages of using subsidiary ledgers are that they:
领航教育│商科补习 ACCG101 Tutorial
Permit transactions affecting a single customer or single creditor to be
shown in a single account, thus providing necessary up-to-date
information on specific account balances.
Free the general ledger of excessive details relating to inventory,
accounts receivable and accounts payable. As a result, a trial
balance of the general ledger does not contain potentially thousands
of individual account balances.
Assist in locating errors in individual accounts by reducing the number
of accounts combined in one ledger and by using control accounts.
Permit a division of labour in posting by having one employee post to
the general ledger and a different employee(s) post to the subsidiary
ledgers.
BE6.3 Cumin Ltd
(a) Separation of duties
(b) Independent internal verification
(c) Documentation procedures
E6.2
