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Internal Controls in Cash Collection


You are the auditor of Kodor Pty Ltd and have made the following notes onKodor’s cash receipts procedures : - Cheques from customers are received by mail and from sales representatives, who may obtain the cheques directly from the customers - All cheques are to be then forwarded to the credit control clerk in the sales order department, who restrictively crosses the cheques so that they can only be banked into Kodor’s bank account. She then enters the details of the cheque into the system via a terminal She attempts to age the receipt from the remittance advice details provided by the debtor , as attached to the cheque. If inadequate details are provided , she allocates the receipts to the oldest balance first . - After all cheques have been processed , the credit control clerk prints the daily cash receipts report. This report details all cheques input into the system since the production of the previous report. She agrees all cheques to this report, prepares a bank deposit slip and banks the cheques. At the end of the day ,the accounts receivable master file is updated with cash receipts data . Required: (a) Identify any weaknesses in the above internal controls . (b) Discuss the implications (effect on the audit ) from the weaknesses identified .