Answer to Question #79139 in Finance for Owen Marsden

Question

The auditors investigated and reported that the section manager responsible for major purchases had paid invoices to a company which he and his wife owned. The amount paid to the company was in excess of $500,000.

The section manager was responsible for signing off on work completed, or supplies received, and authorising payments. His wife was responsible for issuing the cheques. Both were signatories to the cheque account.

What breaches of internal control were there and what modifications to procedures would you implement? Prepare a 5 page report outlining your suggested course of action.

Answer 1

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