Assignment

Course Title: Financial Accounting

Course Code: ACT 101
Submitted To:
Dr. Anup Chowdhury
Dean, Faculty of Business and Economics
Department of Business Administration
East West University
Submitted By:
Name: Mukit Al Asib
ID: 2019-1-10-035
Section: 01

Date of Submission: 7th May, 2020

 Ans. To The Question No.1

Yes, the changes made by the manager is good one. For this changes problems of account errors
can be recovered. If the losses happened continuously it will create a great hamper for a retail
store. When a specific task divided to a specific person it is very much easier to control and
supervise. As at the retail store all of the employees have access to the same cash register so it is
little bit difficult to find out the real fraud. The manager can also follow the steps which are
given below-
1. Establishment of responsibility,
2. Segregation of duties,
3. Documentation procedures,
4. Physical controls,
5. Independent internal verification,
6. Human resource control.
If the manager of retail store follow the above steps it will be easier to control the problems of
account errors and fraud.
 Ans. To The Question No.2

Segregation of duties is indispensable in an internal control. There are two common applications
of this principle. They are-
1. Different individuals should be responsible for related activities.
2. The responsibilities for recordkeeping for an asset should be separate from the physical
custody of the asset.
The rationale for segregation of duties is this: The work of one employee should be done without
a duplication of effort provide a reliable basis for evaluating the work of another employee. In
that manufacturing plant we can see that one single person is doing all the works so that the rules
of segregation of duties were not used properly. Different persons should be responsible for
different types of tasks.
 Ans. To The Question No.3

The AP clerk should prepare the check. A check is a written order signed by the depositor
directing the book to pay a specified amount of money to a designated recipient and she should
inform her immediate supervisor. Because the clerk orders sales, counts cash and prepares
deposit slip. On the other hand the supervisor removes locked cash register tape, sends cash
register tape to the accounting department who agrees register tape to deposit slip and records
slip and records journal entry. So, they are connected with each other by their work. If the
supervisor is not informed then frauds can be occurred. So she must inform her immediate
supervisor before sending cash and deposit the slit to bank.
 Ans. To The Question No.4

Even though technology has improved the internal control structure of a company, a supervisor
cannot depend totally on technology. There are also some internal control system that should be
maintained besides technology.

 A Control Environment: It is the responsibility of top management to make it clear that the
organization values integrity and that unethical activity will not be tolerated. This component is
often referred to as the “tone at the top”.
 Risk Assessment: Companies must identify and analyze the various factors that create risk for
the business and must determine how to manage these risks.
 Control Activities: To reduce the occurrence of fraud, management must design policies and
procedures to address the specific risks faced by the company.
 Information and Communication: The internal control system must capture and
communicate all pertinent information both down and up the organization, as well as
communicate information to appropriate external parties.
 Monitoring: Internal control system must be monitored periodically for their adequacy.
Significant deficiencies need to be reported to top management and/or the board of directors.
 Ans. To The Question No.5

An employee face various kinds of problems in balancing bank reconciliation. If a company fails
to follow the internal control principle of independent internal verification case embezzlements
may go unnoticed. In reconciling the bank account it is customary to reconcile the balance per
books and balance per bank to their adjusted cash balance. The supervisor said that employee to
make a plug this seems to create a fraud. When this type of directives stayed in company there
are many kind of problems happened. Firstly the probability of fraud increased. Secondly the
employee or who made the plug have to misrepresent the records. Thirdly accountibity occurs to
that company. Lastly the internal control system become weak to monitor the illegal works.