Knottyville Country Club Case Study

Case 8
In this case, we noticed that there were a lot of weaknesses of internal controls and monitoring in the club. Firstly, even though the checks were needed to be signed by two people, Fancy asked Sarah to sign the blank checks so that she can pay suppliers on time. However, there were no other people monitor Fancy to write the checks, she could write what she wants on the checks. Secondly, the duties were not segregated appropriately in this company. Fancy had the ability to order supplies, sign the checks, and record the money, so she had power to make fault orders, sign the checks by herself, and make the wrong record without any supervising. Furthermore, the alcoholic beverages supplier which was her college classmate was skeptical
Firstly, the club can have better segregation duties for the checks, for example, dividing in writing checks, making bank deposits, recording, and reconciling the bank statements. Secondly, it is better for club to divide procurement representatives and accountants in indifferent parts. In fact, if procurement representatives need to make the orders, they need to provide the quotations to the accountants so that there is no problem of kickbacks. Thirdly, I suggest the club to have accounting systems for servers to record the meals and drinks which they sell every day. In addition, they need to check the money with record every day to ensure there is no mistakes for punching wrong numbers and reaching balance between money and services. Furthermore, the club needs other people to monitor the records and the money timely.
If I have been hired for the external auditors for Knottyville Country Club, I will list some red flags of asset misappropriation based on the case. According to SAS No.99, firstly, the club lacks of appropriate internal controls and independent checks. Secondly, inappropriate recordkeeping of sale and cash. Thirdly, there is no organized and timely reconciliation of assets. Fourthly, there is no serious monitoring so that employees are able to commit the
If we have list of the number of logon attempts, we can notice that someone try to log in the data without permit. So, this is the red flag which we need to concern.
3. If we know the recent change records of the company, we can ensure that they follow the procedures to change which includes in the internal controls.
Personnel
1. Bob may have concerns about the temporary employees because they may not be responsible for the data entry. Furthermore, the company will not do the specific background assessment for temporary employees, so it is risky for the company to hire so may temporary employees.
2. The company just assigned one manager to check the claims before submitting all the paper claims and paying the money. No one can monitor the manager for changing the number, so this point might be a concern for Bob. The company need a control activity like final review here before the submission by another independent manager.
3. There is no further review for the resubmit claims, we can not confirm that the claims are exactly correct or not. Bob might concern about the information is wrong, so the claims need final reviews before