Question

What controls would an auditor expect to find if a company has programmed their computer information system to print and distribute cheques without any further authorization?

a.Logs to record authorization for cheque runs
b.Use of pre-numbered cheques
c.Two manual signatures of cheques of significant dollar value
d.Programmed maximum amounts per cheque
e.Bank reconciliations performed by the individual running the cheques

Answer 1

An auditor would expect a company with automated cheque printing to have controls like the use of pre-numbered cheques, programmed maximum amounts per cheque, and regular bank reconciliations by someone not involved with cheque processing.

Step-by-step explanation:

An auditor would expect a company that has a computer information system programmed to print and distribute cheques without any further authorization to have various internal controls in place. These controls would typically include:

• Use of pre-numbered cheques to ensure accountability and to prevent cheque fraud.
• Programmed maximum amounts per cheque which provide limits to the dollar amount that can be issued without additional authorization.
• Regular bank reconciliations to be performed by someone not involved in the cheque creation and distribution process.

Other controls may also include restricting access to the cheque printing system, requiring digital signatures, and ensuring that the cheque printing software has robust security measures.