The two items that have been misclassified can be used to misapply organization funds. This misclassification will be prevented by putting in place proper internal control. All items should be classified by the supervisor and counterchecked before recording. At the end of the week, there should be a reconciliation of the records. This will ensure that there are no items, which are misclassified.
The three invoices, which are not initialized by the controller, can be used to misappropriate the company’s funds. To avoid filing invoices that are not initialized by the controller, it should be a requirement that all invoices should be initialized before filing. To ensure that this is followed, the controller should check the invoice file from time to time to ensure that all the invoices are initialized. If an invoice is found in the file without initials, the clerk responsible for filing should be made answerable and proper disciplinary action should be taken to any officer who is found to have filed such document.
The misstatement in this scenario is that a document has taken a long period before being recorded. The internal controller should ensure that all documents are filed and recorded within a reasonable time. Assuming Jay Klein is a large corporation and has large transactions meaning that all receiving reports should be recorded within 6 hours upon receipt. No officer should be allowed to exceed this period unless with a good reason and still it should not exceed 24 hours. If a period is exceeded then proper action should be taken.
Any invoice that is paid twice shows the existence of fraud and misapplication of resources. To ensure that no invoice is paid twice, the internal controller should ensure that all payments are made against original invoices. A duplicate invoice will only be used when there is proof that the original has been misplaced. The customer will be required to send a statement showing the amount owed.
To ensure that the checks amount tallies with the amount in the vendor’s invoice first, the controller should counter-check the amount paid against the amount is in the check issued by the payment office. If the amount does not tally, the internal controller should communicate with the clerk responsible for writing checks. This check should be canceled. This means that before a check is issued, the vendors‘ invoice to be paid should be approved. Failure to approve may lead to the misappropriation of the company’s resources. Cash disbursement journal entries dates should reconcile with the date of the check. The related monthly general ledger summary entries shall carry the date of the month summarized.
Voiced checks should be taken to the accountant or financial controller for inspection, then filing numerically will follow. This file should be checked regularly to ensure all checks that are void are recorded. In this case, there will be no void check that will go missing without being discovered. If any, it means that the financial controller does not check the work of clerks.
All vendor invoices should be initialized once they are received and the item invoiced are confirmed to be correct together with the delivery note. No invoice should be inconsistent with the delivery note. The supervisor shall compare the two copies to avoid discrepancies such as extension error; one should ensure that the same amount is recorded in the subsidiary accounts of the customer.