BSA24
Identify weaknesses in the internal control of the below case and provide
recommendations for improvement for each weakness identified.
 The smallest branch of Super Cosmetics employs Mary Santos, the Branch
Manager, and her sales assistant, Jane Reyes. The branch uses a bank account to
pay expenses. The account is kept in the name of Super Cosmetics - Special
Account. To pay expenses, checks must be signed by Mary Santos or by the
Treasurer of Super Cosmetics, Juan Dela Cruz. Ms. Santos receives the canceled
checks and bank statements. She reconciles the bank account herself and files
canceled checks and bank statements in her records. She also periodically
prepares reports of cash disbursement and sends them to the head office.
Weaknesses
Recommendations
The bank statement and cancelled checks
was reconciled by the manager – Ms.
Santos.
Send all bank statements to the home
office, and use a list of cash disbursements
and all supporting documents to report
directly to the home office; Allow another
employee to countersign checks for
company expenses and undertake bank
reconciliation to eliminate fraud and
future dangers.
To ensure that their money is handled by
an accountant rather than a manager, the
organization must hire an accountant to
separate accounting tasks, manage their
finances and restrict access to their
financial system.
(FINANCIAL WEAKNESS)
They do not have an accounting
department that will manage their
finances.
(ADMINISTRATION WEAKNESS)