Cash Disbursement- A cash disbursement is 

a payout of funds in cash.

Mistatements (Cash Disbursement)

1. Inaccurate recording of a purchase or disbursement

2. Duplicate recording and payment of purchases

3. Unrecorded disbursments

1. Inaccurate recording of a purchase or disbursement

Internal control weakness:

1. Inadequate segregation of duties.

2. Ineffective control for matching invoices

3. Ineffective accounting coding procedures

2. Duplicate recording and payment of purchases

Internal Control Weakness:

Ineffective Controls for review and cancellation of supporting documents by the check signer.

3. Unrecorded disbursements

Internal Control Weakness:

Ineffective control over record keeping for and access to cash

INTERNAL CONTROL OVER FINANCIAL INVESTMENTS

Important group of financial investments

1. Marketable stocks

2. Bonds

Internal Auditors- the one who must be concerned with derivatives

Derivatives- financial instruments that derive their value from other financial instruments, underlying
assets or indexes

Major Elements of Internal Control over financial investments

1. Formal investment policies

2. Investment Committee of the Board of Directors

3. Separation of Duties

4. Complete detailed records of all securities and derivative instruments

5. Registration of securities in the name of the company

 6. Periodic Physical inspection of securities

7. Determination of appropriate accounting

Joint control- neither of the cutodians may have access to the securities except in the presence of the
other

Mistatements (Financial Investments)

1. Mistatement of recorded value of investments

2. Unauthorized investment transactions

3. Incomplete recording of investments

Mistatement of recorded value of instruments

Internal Control Weakness:

1. Inadequate Acconting manual, incompetent accounting personnel

2. Ineffective board of directors, audit committee or internal audit function

2. Unauthorized investment transactions

Internal Control Weakness:

1. Inadequate segregation of duties of record keeping for and custody of securities

3. Incomplete recording of investments

Internal Control Weakness:

1. Inadequate accounting manual; incompetent accounting personnel

2. Inadequate monitoring by internal auditors

Internal Control over Receivables

Accounts receivable include not only claims against customers arising from the sale of goods or services
but also a variety of miscellaneous claims

Sources and Nature of Notes Receivable

Notes receivable are written promises to pay certain amounts at future dates.