INTERNAL CONTROL WEAKNESSES
Material received by the receiving clerk are not
verified
Limitation of Access Control
No General Ledger Department
No Purchasing Department
Duties and responsibilities of Accounts Payable
Department and Cash Disbursement are merge
into one.
Duties of each department are not properly
segregated (Segregation of Duties)
RECOMMENDATION
The receiving clerk do actual count and account
incoming goods to protect the company for
deficiency of inventory. It must be reconciled by
comparing documents quantity and actual count.
The company’s departments must be
independent with each other to secure its assets
and other important information. It is important
to limit the access control of specific department.
Absence of limitation of access control makes
more fraud due to high opportunity and less
ethics of the personnel. Access control is
designed to ensure that information are credible.
The entity must have independent department
such as the General Ledger Department. It is to
verify the input and output of other department
under General Ledger.
Purchasing department must perform and
prepares a purchase order to be given to the
vendor. The inventory control must be separated
from purchasing department.
Every department of the company must be
separated as well as the duties of its personnel. A
cash disbursement department in an entity must
be separated from Accounts Payable Department
to reduce the case of having the Accounts
Payable department to falsely record the liability
and updates accounts payable subsidiary ledger
and distribute voucher and supporting
documents to Cash Disbursement Department.