Question
Rogers, North and Housour, LLC is a large, regional CPA firm. There are 74 employees at their Mississauga, ON, office. The administrative assistant at this
Rogers, North and Housour, LLC is a large, regional CPA firm. There are 74 employees at their Mississauga, ON, office. The administrative assistant at this office approached Mr. Rogers, one of the partners, to express her concerns about the inventory of miscellaneous supplies (e.g. pens, pencils, papers, USB sticks and envelops) that this office maintains for its clerical workers. The firm stores these supplies on shelves at the back of the office facility, easily accessible to all company employees.
The administrative assistant, Sandra Collins, is concerned about the poor internal control over these office supplies. She estimates that the firm loses about $350 per month because of theft of supplies by company employees. To reduce this monthly loss, Sandra recommends a separate room to store these supplies and that a company employee be given full-time responsibility for supervising the issuance of the supplies to those employees with a properly approved requisition. By implementing these controls, Sandra believes this change might reduce the loss of supplies from employee misappropriation to practically zero.
- If you were Mr. Rogers, would you accept or reject Sandras control recommendations? Explain why or why not. (Tie your answer into the control activities listed in your textbook pages 286-294 - What is missing? What is already there?)
- Identify two control procedures (one preventative and one detective) that the firm might implement to reduce the monthly loss of theft from office supplies. And describe how it will prevent/detect the losses.
- Preventative control:
- Detective control:
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