Question
The following describes the cash receipt procedures for medium sized online and catalogue based retailer. Customer payments come directly to the general; mail room along
The following describes the cash receipt procedures for medium sized online and catalogue based retailer.
Customer payments come directly to the general; mail room along with other mail items. The customer payments mail constitutes about 20 percent of the total mail received each day. The mail clerk sort through the mail, open the customer payment envelopes, remove the customer cheque and remittance advices, and reconcile the two documents. The mail room supervisor then sends the reconciled cheque and remittance advices to the AR clerk, who posts the amounts received to the customer AR subsidiary ledger and the cash receipts journal from her computer terminal. The AR clerk then manually prepares a remittance list of all cheque received, endorses cheque "for deposit only" and sends the cheque and remittance list to the treasurer. Finally, the clerk files the remittance advices in the AR department.
Once the cheque and remittance list arrive at the Treasury department, the treasurer reconciles the documents, and manually prepares three hard copies of the deposit slip. Next, he sends the cheque and two copies of the deposit slip to the bank. Finally, he files third copy of deposit slip and the remittance in the department.
Required:
Identify the internal control weaknesses, associated risks and internal control in the cash receipts.
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