Question 02

Define internal control. What are the main objectives of an internal control system? What are the key components of internal control?

Question 03

What is meant by Segregation of Duties? How can segregation of duties reduce the risk of undetected errors and irregularities regarding a company's asset resources?

Question 04

Anthony is a sales clerk at a large departmental store in Sydney. Over the past few months, Anthony has been involved in a scheme in which he prepares sales return forms and takes money from the cash register in the amount of the fictitious sales return.

Required: What internal control weaknesses exist with respect to sales returns? What are some control procedures that would be effective in detecting this sort of scheme?

Question 05

Briefly explain the types of segregation of duties policies should be adopted within the Accounting Information Systems (AIS).

Question 06

Discuss briefly different functions of the internal auditor in an ongoing monitoring of the internal control system.

Question 07

Define corporate governance. What are the basic elements of good corporate governance?

Question 08

Identify two laws that set the legislative framework for corporate governance, identify the organizations responsible for the administration of these laws and explain their key role.

Question 09

Briefly explain the ASX (Australian Stock Exchange) principles of corporate governance.

Question 10

Briefly explain the basic principles of ethics to be followed by the accounting professionals in order to maintain good corporate governance.

Question 11

The controller of a Philippine subsidiary confessed to embezzling more than $100,000 by taking an advantage of currency conversions. The Philippine controller maintained two accounts- one account in Philippine pesos to deposit funds collected locally and the other in US dollars so he could transfer funds from the Philippine account on a biweekly basis. The auditor became suspicious when he noticed that each transfer was rounded to the nearest thousand in pesos and dollars. For example, one day the statement showed a transfer of 885,000 pesos from the local currency and a transfer of exactly $20,000 in to the US dollar account. Further investigation revealed that the controller was actually withdrawing cash from the peso account, keeping some of the money, and depositing only enough pesos in the US currency account to show a transaction of exactly $20,000. Because the withdrawal and the deposit took place almost simultaneously, the US controller never suspected any wrongdoing.

Required: How did the Philippine controller successfully perpetrate his fraudulent activity? Analyze the case from the point of segregation of duties.