Correct Weaknesses in Freeze-Times system Essay Example | Topics and Well Written Essays - 500 words

Correct Weaknesses in Freeze-Times system - Essay Example This escalates the potential of theft and concealment. Moreover, receiving transactions should not be generated without actually receiving goods accompanied with proper evidence of delivery. This is because goods may not be reported or reported inaccurately that may lead to misstated inventory. In addition, the ordering department should be independent from the accounting and operating departments that process data the responsibilities for requisitioning, purchasing, receiving should be clearly divided from those of invoice processing, accounts payable etc. This is because an employee can order inventory from a fake supplier and send payment to post office box rented by him. Hence, Rosa and Benita should take segregate duties and appoint specific individuals for each task. Moreover, periodic physical inventory count of merchandise should be conducted to determine if it corresponds with the amount recorded in the books. Not only should Rosa check receiving reports before making payments, but she should also cross-check it against price stated on vendor invoices. 1. It is the management that decides activities/transactions that require supervisory or other approval to be performed. Normally only expenditures beyond capital addition levels require management approval. 2. Segregation of duties of inventory purchaser and equipment purchaser is critical to protect equipment so that no one person controls everything. Additionally, this will often lead to errors in the financial statements by confusing purchasing inventory with equipment and vice-versa; hence, misstated financial statements. Law requires employees are to fill appropriate forms regarding receipt and responsibility over of equipment. Therefore, a specific person should authorize equipment purchases, correctly record new purchases and record changes in equipment in order to be held accountable. 4. Retired and