Question
At Leah Company, cheques are not prenumbered because both the purchasing agent and the treasurer are authorized to issue cheques. Each signer has access to
At Leah Company, cheques are not prenumbered because both the purchasing agent and the treasurer are authorized to issue cheques. Each signer has access to unissued cheques kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining to goods purchased for resale. Prior to payment, the
purchasing agent determines that the goods have been received and verifies the mathematical accuracy of the vendors invoice. After payment, the invoice is filed by vendor, and the purchasing agent records the payment in the cash disbursements journal. The treasurer pays all other bills following approval by authorized employees. After payment, the treasurer stamps all bills PAID, files them by payment date, and records the cheques in the cash disbursements journal. Leah Company maintains one checking account that is reconciled by the treasurer. Required: (a) List the weaknesses in internal control over cash disbursements. (b) Write a memo to the company treasurer indicating your recommendations for improvement.
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