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Asset Irregularities essay help free Chemistry homework help

Instructor Name Introduction The following will outline the procedures and steps necessary to detect irregularities that can occur in the accounts receivable, inventory and fixed assets of Apollo Shoes. The flowcharts will show how the use of internal controls is integral to the overall success of the organization. In the accounts receivable, the sales and billing processes are an area that would require attention.

With the inventory representing a large portion of the assets at Apollo Shoes, special attention should be spent on the internal controls in that area. However, there also has to be emphasis on the fixed assets, such as vehicles, land, buildings, and the machinery required in the overall business operation. The sections that follow will provide a summary of the processes that are required to detect irregularities in those areas. Accounts Receivable

Accounts receivable fraud typically begins with errors within the billing process and can be examined by taking a sample of customer accounts receivable records and reviewing the original sales information to the customer balances. This process will uncover phony customers and receivables meant to strengthen the company financial statement. The sales and billing process must be precise for the accounts receivable to be correct (Wells, 2011). Another issue when the billing is corrected is the theft of the payments received on customer accounts.

The theft normally occurs between several customer accounts where the first payment is taken and the next customer’s payment is applied to the first and the cycle continues. To keep this fraud activity going, it takes good record keeping; however this can be exposed quickly if proper customer records are kept and evaluated on a regular basis will be exposed quickly. Discounting can be another area for fraudulent activity within the accounts receivable process. This takes place when an employee records a discount for a customer on their account.

When the customer pays the full price of the bill, the employee collects the additional amount. To avoid this, there should be a separation of duties between the employee who posts and receives the payment (Wells, 2011). It is imperative to have set policies and procedures and internal controls to prevent fraudulent activity. Substantive procedures for identifying irregularities in accounts receivable are outlined in a flowchart in Exhibit 1. Exhibit 1 Accounts Receivable Flowchart Run report for invoices not paid within 30 days

Post payment to customer’s account Give the customer a copy of the invoice at the time of sale or mail/email invoice Invoice paid? Charge the sale to the customer’s account At the end of the year decide what accounts are uncollectable Send reminder invoice to any customer not paid at 30 days Inventory and Warehousing Irregularities Inventory categorized as noncash tangible assets that can be misappropriate by employees by misuse or theft. Inventory items misused are computers, company vehicles, company supplies, and office equipment.

When inventory is stolen, it is usually goes unnoticed until either a complaint issued by customers or doing audit of physical count conducted and compared to perpetual (system) generated reports. A number of inventory schemes fraudsters create to cheat a company out of its most valuable assets. These inventory schemes consist of shrinkage and padding of numbers, falsifying incoming shipments, false sales, and accounts receivable, inventory write-offs. These schemes usually carried out by managerial personnel such as supervisors, purchasing managers, and sales personnel (Wells, 2011).

External audits of inventory and other assets review on annual basis ensuring company inventory internal controls and processes are in compliance with company operational policies and procedures; following the general acceptable accounting principles established. To ensure company policies and procedures are in compliance with GAAP, fraud examiners should perform substantial testing of entire inventory processes to detect and cite irregularities. Some substantial testing of inventory is: 1.

Review source documents and trace transaction to the A/R or A/P modular of system. A/R documents – Bill of lading, invoice, and purchase order. The A/P documents will be shipping and receiving document, receiver, and purchase order. 2. Observe physical count of inventory and compare against perpetual inventory report. 3. Analyze large or unusual sales made near the end of the year. 4. Perform analytical review of write-off and credit memos activity. Substantive procedures irregularities in inventory are outline in a flowchart in Exhibit 2.

Exhibit 2 Determine if asset need to be change No Yes Yes No Physical Inventory Asset is tagged Asset Tracking System Asset added to tracking system Determine if changes need to made to asset record recordeed to be made to asset record Asset is expensed Reconciliation Fixed asset updated form Purchase of item over $5,000

Technical and Functional Quality

Watch the following video for this activity:
Meet the Parents – Airport Scene
Provide an example of technical and functional quality that you see in this video. Comment on the technical quality of the service customer has received or will be receiving and the functional quality of service the customer has received or will be receiving.