Accounting
Solution
Worksheet
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Name:
Date:
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Topic:
INTERNAL CONTROL
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Question 1
What role does the Accountant play in the 21st Century?

Preparing the accounts and annual reports

Forecasting and budgeting

Analysing and interpreting data

Providing management with information for decision making

Safeguard the business to ensure reasonable chance of long term success.
Question 2
Auditing standards set out what four objectives?

Correct authorisation for appropriate business transactions

Accounting records from the transaction to the final reports are executed in the
appropriate manner while maintaining promptness and accounting policy

Access to assets is permitted only in accordance with management
authorisation

Steps are taken to ensure recording of assets and the existence of the assets
are compared at regular intervals and safeguards are instituted to minimise
any differences.
Question 3
To have an effective internal accounting control system, what six major principles
apply?
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Segregation of incompatible functions
Authorisation procedures
Documentation procedures
Accounting records and procedures
Physical control
Independent internal verification
Question 4
List four safeguards that should be in place for cash payments. (Any four)
(i)
(ii)
(iii)
(iv)
(v)
all major payments should be made by cheque and require dual signatures
cheques issued in numerical order and marked “Not Negotiable”
multi column cash journals maintained
remittance advice forwarded with cheques
small payments should be handled through a Petty Cash Imprest System
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Accounting
Solution
Worksheet
____________________________________________________________________
(vi)
regular bank reconciliation statements
Question 5
What safeguards should be put in place concerning cash receipts?
(i)
(ii)
(iii)
(iv)
(v)
(vi)
receipts issued whenever possible, in numerical order
daily banking and vary banking times
money kept on the premises in a safe and secured location
independent checks carried out on till tape and money totals
multi – column cash journals
regular bank reconciliation statements
Question 6
What safeguards should be put in place concerning accounts receivable?
(i)
(ii)
(iii)
(iv)
(v)
(vi)
before credit is granted to clients, check references
credit limits should be enforced
prompt invoicing and monthly statements
review ageing of Accounts Receivable and create Allowance for Doubtful
Debts
Interest charged on overdue accounts or discounts for early payment
Control Accounts and Subsidiary Ledgers introduced
Question 7
List six safeguards that should be put in place for non-current assets.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Control including purchasing, maintenance, recording, storing, access and
disposal
Subsidiary ledger and registered asset cards
correct personnel allocated responsibility
capital expenditure officer has long term plan for the business
storage or replacement of non-current assets planned carefully
certain assets be left in one location, and assets that are portable safeguards
to individuals of responsibility including insurance
Question 8
What safeguards should be in place concerning staffing?
(i)
(ii)
(iii)
when employing staff, it is critical that references and qualifications are
checked
staffing records should be brought up to date regularly
all staff to be reviewed and evaluated annually
Question 9
What does “division of duties” mean?
Wherever possible, certain tasks or jobs should be divided so no one individual has full
control over a set division or section. Each person can have a specialist role, but has
not got full control or authority that security is not put into jeopardy.
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