Problem : Explain how the principle of separation of duties is

violated in each the following situations. Also suggest one or more

procedure to reduce risk, and exposure highlighted in each of
example. Solving
Problems: a. A payroll clerk recorded 40-hour workweek for an
employee who had quit the previous week. He then prepared a
paycheck for this employee, forged her signature, and cashed the
check.
Violation: The payroll clerk only have an authority to prepare the
paycheck, not to signature or cashed the checks. The signature of
payroll is the duty of HR manager, while cashed the paychecks is
the duties of the cashier, so, the payroll clerk has violated his/her
job description and his/her authorities.
Solution: To reduce the risk, the company must make a clear
workflow, the payroll clerk must be ensured only has an authority to
make the paycheck, then from the payroll clerk, every paycheck
must be received to HR manager to check it, if its agreed, then
from the HR, it will brought to finance department, and it must be
received by the A/P department first, the A/P department will make
the invoice for the payment and then its delivered to finance
manager for the second check point. After the finance manager
agree, then the cashier will make the check for the payment. Before
the check is cashed, the cashier must have the assignment first
from the finance manager. With this workflow, it can reduce the risk
which is cause with the problem above.
Cashier has no right to make an invoice Solution Company should
have a difference among the employees jobs. and the finance
manager can check the invoice to the A/P department. An employee
of finishing department walked off with several parts from the store
room and recorded the items as having been issued to the assembly
department. and to book keeping department. so the cashier will
not able to make an electronic payment if the invoice not be
delivered to the finance manager first.
Violation: Cashier is not have a right to make an invoice. cashier set
aside. the invoice must be prepared by A/P staff. to purchasing. so if
the cashier trying to make fictious invoice it can be checked easily
in A/P department from the invoice number.
Solution: To avoid this problem. it must be connected to cashier. And
every invoice must be received by the finance manager first if the
company wanna make a payment to anyone. and the cashier can
not make a payment before they got the assignment from the
finance manager. The invoice must be prepared by A/P staff c. He
sent an electronic payment for the invoice to his brother in law. two
checks payable to the company on account. to cash control. Then
the system which is used must be online and connected to every
department in finance.
A cashier prepared a fictious invoice from a company using his

brother-in laws name. .b. and it will be proved fictious because in

the A/P department theres no data about the invoice which is fake
and made by the cashier.
Violation: Cashier should be able to separate the things. so it can
easily known if the invoice is fake. d. there is no clear job description
in this problem. Every invoice must be has a clear number of
invoice. the company must be make sure that the right to make an
invoice must be in A/P department. and subsequently cashed. While
opening the mail.
it will be the cashier staffs responsibility to prove whats happen to
the money. in the journal and ledger. If thats not equal. the journal
will be cash in debet to A/R in credit.Violation: The things have been
recorded are not able to be recorded twice. pocketed the cash. so
the cashier can do this. A cashier cashed a check from a customer in
payment of an account receivable. and conceal the theft by properly
posting the receipt to the customer account in the accounts
receivable ledger. There should not have a fraud in the record e. .
This means there are money in to the company so every month we
can calculated the amount of money we received and the A/R that
has been liquidated become cash and we can see if the money that
we have received is it equal or not with the amount of A/R that has
been liquidated become cash. This problem probably can happen
because of the weak internal control. theres no tight controlling in
cash receiving. when that fraud cashier staff posting the receipt to
the customer account in the A/R. The cashier has violated the ethics
of work with do this. Because it will affect the other things Solution:
There must be a control of accounting records in the specific
accounts. Violation: This is a fraud problem. Solution: There must be
a cash check every the end of the month.