Internal Control

WEAKNESSES RECOMMENDATIONS
A receiving department should be
established. Personnel in this
department should count or weigh all
goods received and prepare a
1. There is no receiving department prenumbered receiving report.
or receiving report. For proper
A copy of the receiving report should
separation of duties, the
accompany the inventory when it is
individuals responsible for
transferred to storage and be signed
receiving should be separate from
there by the inventory staff.
the storeroom clerks.
The copy signed by storage personnel
should be sent to Accounts Payable to
show that the items have been received
and placed into inventory.
2. Purchase requests are not Purchase requisitions should be reviewed
reviewed and approved prior to and approved by the originating
submission. This can result in department’s manager prior to being
ordering unnecessary items. processed.
Regular physical counts of inventory need
3. There is no mention of periodic
to be conducted.
physical counts of inventory. Thus,
Discrepancies with the perpetual
the perpetual inventory records are
inventory records need to be promptly
likely to become inaccurate over
investigated.
time. It will also not be possible to
detect theft of inventory in a timely
manner.
4. There is no inspection of the
merchandise received. Since high-
cost electronic components usually The goods need to be inspected for
must meet certain specifications, quality standards promptly upon receipt.
they should be tested for these
requirements when received.
Salespersons must be required to submit
printed spreadsheets of receipts that
could support figures therein. Thus, the
5. Expense Reimbursement
spreadsheet must contain details that are
important in determining if the expenses
are necessary for the company’s trade.
6. Compensation Scheme Measures must be done to check whether
the sales commission that salespersons
were receiving are reasonable and that
these figures could possibly indicate the
performance of such salespersons
because the salespersons might be
 receiving huge amounts of sales
commission annually.
Management through accounting
department must make weekly
7. Billing Scheme confirmation report on the actuality of
such customers and the information
regarding the inventory volume.
8. False details as to travel expenses Travel expenses mentioned by the
which might result to excess salesperson should be checked by
expenses submitted to cash someone in the management before the
disbursement clerk check is issued for the same.
Company can provide additional
incentives to those who record a sale
9. Recording non-existent sales without a return and such amount can be
paid to them after the return period is
over.
Cash disbursement department only
authorizes payment with voucher
10. Fraudulent disbursements
package, but treasurers or cashiers signs
and pays checks.
There must be a verification from the
11. Written notice of equipment receipt approver that the company received what
not sent to accounts payable it had ordered before approving for
payment.
Send voucher package (purchase order
12. Voucher package not sent to
and receiving report) to Treasurer along
Treasurer.
with approved invoice.
13. Voucher package not cancelled Treasurer should mark voucher package
when invoice paid. as paid when check is signed.
Bank account should be reconciled by
14. . No mention of bank
someone other than Accounts Payable or
reconciliation.
the treasurer.