[Nini]

Why Clerk 2 is not the answer? I thought reconciliation can’t be done by someone who handles accounting records and “enters vendor invoices into the accounting system” is definitely “recording”

A company employs three accounts payable clerks and one treasurer. Their responsibilities are as follows:

Employee Responsibility
——– —————————————————–
Clerk 1 Reviews vendor invoices for proper signature approval
Clerk 2 Enters vendor invoices into the accounting system and
verifies payment terms
Clerk 3 Posts entered vendor invoices to the accounts payable
ledger for payment and mails checks
Treasurer Reviews the vendor invoices and signs each check
Which of the following would indicate a weakness in the company’s internal control?

Incorrect A.
Clerk 1 opens all of the incoming mail.

B.
Clerk 2 reconciles the accounts payable ledger with the general ledger monthly.

C.
Clerk 3 mails the checks and remittances after they have been signed.

D.
The treasurer uses a stamp for signing checks.

Correct answer = C.

[AndreA]

Remember about segregation of duties: Custody of assets, record-keeping and authorization. The best answer is C, Clerk 3 have two responsibilities: Record-keeping and custody, which is not good.

[Nini]

Thank you Andre. Can you explain why clerk#2 is ok?

[Puppykoala]

My understand:
Both 1 and 2 are in the “record-keeping” duty range. 3 is “custody of asset” since he/she mails checks. 3's duty should be performed by an employee independent of AP.
Clerk 2 doesn't custody nor authorize anything so there is no reason for it to be a weakness.

[typark]

Do not stick to the word “Reconciliation”. The meaning of prohibited reconciliation with other duties can be applied to the cash and “bank reconciliation” not the payable account. In this question, the 2nd clerk seems like an employee of the accounts payable department. The A/P department worker should post and reconcile the payable ledger in the accounting system.

[Nini]

Thank you all for replying. I just took AUD yesterday and felt i did “ok”.

[AndreA]

Good luck! What do you think about SIMs, any topics you wish you could study better?

[Nini]

Thanks Andre. If i have to take it again, I will definitely spend more time on Sampling.

[AndreA]

My favorite topic 🙂 You're going to get 80+ no more samplings for you.

[Author]

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