Misappropriation of funds

Internal auditor

Mathew Ghew is one of the directors of the board. Mathew said that as a board member they are given the profit and cash flow budgets. He was appointed by the board to conduct an internal audit of operations to look for weaknesses in the internal control system. His report uncovered the following processes that he believed needed to be strengthened.

Review his findings and make recommendations to improve the business operations

1. While the overall customer base is increasing from year to year, there may be internal control issues relating to how these new customers are secured.

2. Some discounts that were being given to customers were recorded as a net amount on the invoices and gave no indication of the discount from standard prices.

3. Some cash registers in the stores were not reconciling the cash in drawer with the register printout.

4. Not all timesheet overtime amounts were being authorised by the line manager.

5. Service invoices for some items of equipment were not signed or linked to a purchase order. There was no check that the work had actually been carried out.

6. Not all assets in the stores had unique codes fixed to the asset.

7. There were minimal feedback lines of communication from the shop floor to head office, particularly when an error in the budgeting report process was recognised.

8. Debtor reconciliations were not done monthly and sometimes not at all.

9. In busy times the cashiers that operated the registers were also asked to do their own reconciliations and banking. Sometimes the cash was held in the store for a day or two.

10. Job roles were not clearly defined so that responsibilities and liability can be identified.

11. There was little rostering of duties and cash receipts were not pre-numbered.

Recommended way to improve these issue and problems