Dear Tutors,

Re: 9.47 Internal Control Questionnaire Items: Possible Error or Fraud Due to Weakness.Refer to the internal control questionnaire for the production cycle (Appendix Exhibit 9A.1) and assume that the answer to each question is "no."

Please help me with a possible error or fraud associate to each question below. Thanks so much!

APPENDIX EXHIBIT 9A.1Production Cycle

Occurrence

1.Is cost accounting separate from production, payroll, and inventory control?

2.Is access to blank production order forms restricted to authorized persons?

3.Is access to blank bills of materials and labor needs forms restricted to authorized persons?

4.Is access to blank material requisition forms restricted to authorized persons?

5.Are production orders prepared by authorized persons?

6.Are bills of materials and labor needs prepared by authorized persons?

7.Are material usage reports compared to raw material stores issue forms?

8.Are labor usage reports compared to job time tickets?

9.Are material requisitions and job time tickets reviewed by the production supervisor after the floor supervisor prepares them?

10.Are the weekly direct labor and materials used reports reviewed by the production supervisor after preparation by the floor supervisor?

Completeness

1.Are production orders prenumbered and the numerical sequence checked for missing documents?

2.Are bills of materials and labor needs forms prenumbered and the numerical sequence checked for missing documents?

3.Are material requisitions and job time tickets prenumbered and the numerical sequence checked for missing documents?

4.Are inventory issue forms prenumbered and the numerical sequence checked for missing documents?

5.Is accounting notified of terms on purchase agreements?

6.Is accounting notified of orders received on consignment?

Accuracy

1.Are differences between inventory issue forms and materials used reports recorded and reported to the cost accounting supervisor?

2.Are differences between job time tickets and the labor report recorded and reported to the cost accounting supervisor?

3.Are standard costs used? If so, are they reviewed and revised periodically?

4.Are reports for materials issued to production reconciled with finished goods reports?

Cutoff

1.Does the accounting manual give instructions to date cost entries on the date of use?

2.Does an accounting supervisor review monthly, quarterly, and year-end cost accruals?

Classification

1.Are summary entries reviewed and approved by the cost accounting supervisor?

2.Does the accounting manual give instructions for proper classification of cost accounting transactions?