Question 1

Leon, the Auditor of MCM County was in "the office" one afternoon when his deputy auditor,Mary was working on the annual financial report that needs to be uploaded to system in two weeks. Mary has been working with the Mark, James, the Sheriff, Dave, and the Treasurer, Aurela to obtain their supplemental AFR  (Accounting & Financial Reporting ) for inclusion in the financial statement. Three days before the annual financial report is due Mary finally has everything entered into system. Leon comes into Mary's office to check on the status of the AFR and Mary informs him that it is ready.Leon is elated that it is done and will be submitted on time, he tells Mary to submit it by the end of the day today. Mary uploads it on system and move on to her other duties. A few months later a State Board of Accounts field examiner shows up to perform the annual audit. The financial statements are being reviewed and it is determined that the Treasurer did not submit the correct amounts and the financial statements were overstated in receipts and disbursements by $47,587,375 because settlement was included. The Auditor and the Treasurer were each given a finding on internal controls.  

Question:   What internal controls could be implemented?  

Question 2

Leon, the Auditor of MCM County was in "the office" one afternoon when his deputy auditor,Mary was working on the annual financial report that needs to be uploaded to system in two weeks. Mary has been working with the Mark, James, the Sheriff, Dave, and the Treasurer, Aurela to obtain their supplemental AFR  (Accounting & Financial Reporting ) for inclusion in the financial statement. Three days before the annual financial report is due Mary finally has everything entered into system. Leon comes into Mary's office to check on the status of the AFR and Mary informs him that it is ready.Leon is elated that it is done and will be submitted on time, he tells Mary to submit it by the end of the day today. Mary uploads it on system and move on to her other duties. A few months later a State Board of Accounts field examiner shows up to perform the annual audit. The financial statements are being reviewed and it is determined that the Treasurer did not submit the correct amounts and the financial statements were overstated in receipts and disbursements by $47,587,375 because settlement was included. The Auditor and the Treasurer were each given a finding on internal controls.  

Question:  Why were both offices given a finding?

Question 3

Lily was just elected as auditor of PLC company and has started her first day in the office. Lily is getting introduced to all the employees and figuring out who does what. Laurel is the payroll clerk, Leon is the settlement clerk, and Leonard is responsible for claims. Everyone has been very welcoming and friendly. The first few months pass really quickly and Lily is really getting an understanding of how the office flows and what needs to be done. As Lily get more and more familiar with the computer system she quickly realizes that it would be more efficient if all the claims and supporting documentation were scanned into the system for easy accessibility. The claims are now put together by Leonard and submitted to Lily for review and her signature before being placed on the docket for the Commissioners signature of approval. She researches products that would work with her existing software and finds a suitable match and presents it to the commissioners who approve to enter into a contract with the software vendor. The vendor comes in and sets up the new system and within two months they are soaring right along with all indications that everything is working properly. Two years later it is time for their annual audit that would cover the time period of the purchase of the new software. The auditors are in asking questions about the internal control procedures on disbursements. Lily informs them that they have implemented a new scanning procedure and how the Commissioners approve the docket. The auditors pull a sample of the claims and realize that when the software was implemented Lily stopped signing the claims because them became digital. Lily received a finding on compliance and internal control.

Questions:   What internal controls could have been put into place?

Question 4

Lily was just elected as auditor of PLC company and has started her first day in the office. Lily is getting introduced to all the employees and figuring out who does what. Laurel is the payroll clerk, Leon is the settlement clerk, and Leonard is responsible for claims. Everyone has been very welcoming and friendly. The first few months pass really quickly and Lily is really getting an understanding of how the office flows and what needs to be done. As Lily get more and more familiar with the computer system she quickly realizes that it would be more efficient if all the claims and supporting documentation were scanned into the system for easy accessibility. The claims are now put together by Leonard and submitted to Lily for review and her signature before being placed on the docket for the Commissioners signature of approval. She researches products that would work with her existing software and finds a suitable match and presents it to the commissioners who approve to enter into a contract with the software vendor. The vendor comes in and sets up the new system and within two months they are soaring right along with all indications that everything is working properly. Two years later it is time for their annual audit that would cover the time period of the purchase of the new software. The auditors are in asking questions about the internal control procedures on disbursements. Lily informs them that they have implemented a new scanning procedure and how the Commissioners approve the docket. The auditors pull a sample of the claims and realize that when the software was implemented Lily stopped signing the claims because them became digital. Lily received a finding on compliance and internal control.

Questions:  Where is the internal control issue? What could have been done differently?