CASES (Choose 2 of 3 questions, you may answer the questions in Bahasa Indonesia)

LO JANGAN LUPA HAPUS AKSES EMAIL PESERTA YA, MAKASIHH

a. Error, omission and misappropriation

1. Where internal controls are weak, the errors that occur may include the issue of invoices and credit notes for
the wrong amounts, the issue of invoices and credit notes to the wrong customers, the incorrect recording of
invoices, credit notes, cash and contras in the ledgers and daybooks, and the incorrect setting of credit limits.
2. Where internal controls are weak, invoices, credit notes cash and contras may simply go unrecorded.
3. The effect of this will be that receivables may be under or over-stated in the records and that the company
will not receive that money that is due to it, or that goodwill with customers is damaged.
4. The assets that may be misappropriated include cash and inventory. If records are poor, it will be easy to hide
the misappropriation of cash that is received from customers. It will also be possible for inventory to be
misappropriated and hidden by the issue of false or incorrect invoices, credit notes or contras.

b. Main internal controls

1. segregation of duties between those who control the accounting records, those who receive the cash, those
who authorise the issue of invoices and credit notes and those who issue the goods to customers.
2. two people should be involved wherever cash or inventories are being handled in order to prevent both the
misappropriation of assets and to prevent false accusations of misappropriation.
3. the maintenance of a separate receivables ledgers showing the individual balances owing from customers.
This ledger should be reconciled at least monthly to the total figure in the nominal ledger.
4. the issue of statements to customers at the end of each month (from the ledger) showing how much is owed
by the customer.
c. Proper operation of internal controls
1. auditors seek to rely on the proper operation of internal controls wherever possible because where internal
controls are operating properly, reliance on internal controls is the most efficient method of auditing.
2. if the auditor.s tests show that internal controls are operating properly, the volume of substantive testing on
transactions and balances can be reduced.
3. it is always possible (in theory) to perform an audit on the basis of substantive testing alone, but given the
volume of transactions (in all but the smallest of businesses) such an approach would be prohibitively expensive
for the audited entity.