Accountant 492
Week 3 Homework
16-26
Weaknesses in Jameson Company 's Internal control procedures: INGREDIENTS INVENTORY
1. The raw materials are received by one of the employees of the batching department and it is only at the end of the day that tallies are given to the inventory control department. Reason: There is no control to ensure that the actual raw material signed in is actually received and used.
2. The inventory control department uses weekly reports of production and standard formula to calculate ingredient use. Reason: There is no way of ascertaining the actual raw materials used.
3. The inventory control department prepares purchase requisitions. Reason: This is not an authorized way of preparing purchase requisitions.
MAINTENANCE PARTS AND SUPPLIES
1. The practice of storeroom requisitions is not followed always. Reason: There is no control over material issued.
2. The storeroom is not locked when the clerk is out.: Reason: There is no physical control over assets.
3. The storeroom is open during the third shift: Reason: The physical control over assets of the company is lost.
4. The storeroom clerk prepares purchase requisitions. Reason: He is not the authorized person to make requisitions.
5. Physical inventory is taken on a cycle count basis. Reason: This introduces errors in the inventory count.
Recommended improvements:
INGREDIENTS INVENTORY
1. The raw materials are received by one of the employees of the batching department and it is only at the end of the day that tallies are given to the inventory control department. Improvements: The inventory control department should enter the materials received when they are physically received.
2. The inventory control department uses weekly reports of production and standard formula to calculate ingredient use. Improvements: The inventory control department should use the actual use figures of material allotted to production
3.The inventory control department
16-26
Weaknesses in Jameson Company 's Internal control procedures: INGREDIENTS INVENTORY
1. The raw materials are received by one of the employees of the batching department and it is only at the end of the day that tallies are given to the inventory control department. Reason: There is no control to ensure that the actual raw material signed in is actually received and used.
2. The inventory control department uses weekly reports of production and standard formula to calculate ingredient use. Reason: There is no way of ascertaining the actual raw materials used.
3. The inventory control department prepares purchase requisitions. Reason: This is not an authorized way of preparing purchase requisitions.
MAINTENANCE PARTS AND SUPPLIES
1. The practice of storeroom requisitions is not followed always. Reason: There is no control over material issued.
2. The storeroom is not locked when the clerk is out.: Reason: There is no physical control over assets.
3. The storeroom is open during the third shift: Reason: The physical control over assets of the company is lost.
4. The storeroom clerk prepares purchase requisitions. Reason: He is not the authorized person to make requisitions.
5. Physical inventory is taken on a cycle count basis. Reason: This introduces errors in the inventory count.
Recommended improvements:
INGREDIENTS INVENTORY
1. The raw materials are received by one of the employees of the batching department and it is only at the end of the day that tallies are given to the inventory control department. Improvements: The inventory control department should enter the materials received when they are physically received.
2. The inventory control department uses weekly reports of production and standard formula to calculate ingredient use. Improvements: The inventory control department should use the actual use figures of material allotted to production
3.The inventory control department