[Anonymous]

Hello, I’m currently preparing to take the BEC section of the exam and was hoping to get some feedback on a practice of a BEC written exam question.

The Question comes from the Sample test:

SkyView Inc., a small startup company, has hired you as a consultant to assess its financial systems and related processes. During your review, you learn that the company’s accountant is responsible for providing general ledger access to others in the company, processing all financial transactions in the general ledger, and printing checks. The president of the company must authorize write-offs in the system, but the accountant has access to the president’s username and password.

Prepare a memo to SkyView’s president assessing these responsibilities in the context of segregation of duties. Also address the possibility of the accountant committing fraud.

My Answer:

To: Skyview President
From: Andrew McMillan, CPA
Date: June 13th, 2018
Subject: Understanding segregation of duties and the risk of fraud
The purpose of this Memo is to provide a detailed assessment of Skyview’s segregation of incompatible duties and how they may impact the risk of fraud or error. Maintaining strong internal controls requires certain responsibilities to be assigned to different individuals and successful implementation can result in reasonable assurance of preventing or detecting fraudulent activities. Based on the information provided, there are several areas of high fraud risk regarding segregation of duties.
The three main incompatible duties that must be kept separate are custody of assets, authorization of transactions, and bookkeeping. Sharing of these incompatible duties enhances the probability of collusion resulting in fraud either through misappropriation of assets or fraudulent financial reporting.
The Company accountant not only has the incompatible duties of custody of checks and making entries in the general ledger, but also has the ability to authorize write-offs by having the username and password of the company president. The accountant is able to conceal fraud by writing checks to fictitious vendors and falsifying the entries in the general ledger. They then could at a later time authorize write offs of the accounts receivable accounts of the fictitious vendors.
I would strongly recommend assigning the custody of checks and bookkeeping to two different employees and keeping your username and password private in the future.

[alloverit]

It's easily a passable writing sample. If I were going to nitpick anything I would point out that collusion and separation of duties aren't really related. That is, collusion is used between multiple employees/individuals to circumvent separation of duties.

But no matter that or anything else in your sample…you'll be MORE than fine my friend.

[Anonymous]

Okay, I have a few small critiques. My first question, is did you type out the heading or is that part of the question? I never would type out a heading like that, rather, I would just go straight into answering the question in paragraph form.

Not going to critique the content, since it is generally graded by a computer which can't really tell if you are right or not, but here are a few things I noted:
-“Memo” should not be capitalized
-Sentence starting with “Maintaining strong internal controls” is a little long, try to make this into two more concise sentences
-“Company” should not be capitalized

Overall, you might try to keep the sentences a little more concise. Don't overdo it trying to sound formal, but this is a good memo that will easily pass. My advice would be to stay calm if you get a written communication on something you don't know. When I took BEC, I seriously had 2 of the 3 memos on topics I had NEVER heard of.

Best of luck, let me know if you have any questions!

[Author]

Replies