Question
Coppertone Sdn Bhd is a company that makes suntan lotion. As a result of an internal risk assessment exercise, it identified the following weaknesses in
Coppertone Sdn Bhd is a company that makes suntan lotion. As a result of an internal risk assessment exercise, it identified the following weaknesses in its internal controls:
i) Raw materials may be removed from the storeroom upon oral authorization from the production foremen.
ii) Coppertone does not maintain a perpetual inventory system. Although it conducts a monthly stock count to establish its month end stock balance for its raw materials and finished goods, quantities on hand at the end of one month may not be sufficient to last until the next month's count resulting in stock outs.
iii) Raw materials are purchased at a pre-determined reorder level and in pre-determined quantities. Since production levels may often vary during the year, quantities ordered may be either too small or too large for the current production demands.
iv) The accounts payable clerk handles both the purchasing function and payment of invoices.
v) There is no receiving department or receiving report prepared when raw materials arrive at the warehouse.
Required: For each of the above weaknesses suggest an appropriate control.
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