Question 4 40 points Save Answer INTERNAL CONTROL ACTIVITIES (40 marks) Read the case scenario presented below and answer the questions that follow. Redco LLC is a large company that sells high-value electronic products to business clients in the UAE. The company employs high skilled labour and some procedures are manual manufactures computerized chips, Internal control mechanisms exist to safeguard the working environment. However, there appears to be some weakness in internal control Segregation of duties is still very limited in the company Internal control issue. Weakness in segregation of duties Shaima is the se for manager in charge of cashiering and has been with the company for the past 10 years. She is a well-respected member of staff and well aware of the processes and procedures of the company. As such Shaima has assumed greater roles in the Company having responsibilities for: 2 Shaima agrees prices with suppliers providers of goods and services - Shaima has assumed responsibilities of selecting the suppliers 3. Shaima organizes times of delivery of goods and services 4. Shaima is very committed to her job and as such very rarely takes holidays 5. Shaima will periodicaly check inventory and advises the purchasing manager on stock ordering 6. There is an absence of a clear credit granting procedure - Shaima at times gives preferential treatment to her favourite suppliers. 7. Shaima processes all cheques received and banks them herself 8. Shalma carries out credit control duties and at times personally goes to the customers' place of business to collect cash payments 9. Shaima collects cash from cash paying customers at the cashier desk once they have ordered their goods. Much of the system is manual 10. At times, Shaima neglects to give the customers receipts for their payments. Required: You are required to identify from the above case scenario and briefly explain FIVE internal control weaknesses that exist in the company scenario and the associated Internal Control Risk (5 x 8 marks each 40 marks) You should copy and paste the roble below into the answer area and complete it with the necessary information Internal control activity Associated internal Control risk 4.1 4.2 Question Completion Status: 10 2 3 4 S 6 R procedures of the company. As such Shaima has assumed greater roles in the Company having responsibilities for 2. Shalma agrees prices with suppliers providers of goods and services - Shaima has assumed responsibilities of selecting the suppliers 3. Shaima organizes times of delivery of goods and services 5. Shaima will periodically check inventory and advises the purchasing manager on stock ordering 4. Shaima is very committed to her job and as such very rarely takes holidays 6 There an absence of a clear credit granting procedure - Shaima at times gives preferential treatment to her favourite suppliers. z Shaima processes all cheques received and banks them herself Shaima carries out credit control duties and at times personally goes to the customers' place of business to collect cash payments 9. Shaima collects cash from cash paying customers at the cashier desk once they have ordered their goods. Much of the system is manual 10 At times, Shaima neglects to give the customers receipts for their payments. Required: You are required to identify from the above case scenario and briefly explain FIVE internal control weaknesses that exist in the company scenario and the associated internal Control Risk (5 x 8 marks och 40 marks) You should copy and paste the table below into the answer area and complete it with the necessary information Internal control activity Associated Internal Control risk 4.2 4.3 4.4 4.5 TT T Arial 3 (12pt) T-E- E
