On being appointed the auditor of a company for the first time you find that the cashier also handles the books of account and the cash receipt are not being banked intact but parts of these are being utilized for cash payments. What would be your reaction? What recommendations would you make to the company in this connection?

Auditing and Assurance Revision Questions and Answers

The internal control system of the company is found very weak and there are the chances of cash being misappropriated. Recommendations to company for the enhancement of the internal control system of the company are as follows:
 The cashier should not have access to the books of accounts. The books of account should be handled the accountants who should not be directly involved with the cash transaction.
 All the cash collections should be deposited to the bank.
 Cash payments should be made through the Bank.
 Petty expenses should be managed through the Petty cash book, for which purpose the petty cash, imprest should be provided to the petty cashier through the bank.



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