Question

Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase orders, sales invoices and suppliers’ invoices to prepare journal vouchers for general ledger entries. Each day he posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, he reconciles the subsidiary accounts to their control accounts in the general ledger to ensure they balance. Discuss the internal control weaknesses and risks associated with the above process.

Answer 1

The possible monitoring vulnerability in this case will be as follows:

• No division of service

• Too much dependence on the individual

• credibility and location of information, if any, are questionable

• The measurement errors are high

Throughout such a situation, the programme would be configured to include end-users as well as GL offices with a comprehensive checklist of journal coupons and accounts operation records throughout order to prepare for the possible harm.