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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

While auditing Greenfield Institute of Management, a private education service provider, the internal auditor notes that students' fee receipts are issued by a clerk who also maintains the fee ledger and prepares the daily bank deposit. Which control improvement addresses this most directly?

Segregating the duties of issuing receipts, maintaining the fee ledger and making bank deposits among different persons, with an independent reconciliation, is the best fix. When one clerk controls all three steps, misappropriation or lapping can go unnoticed, and separation lets each person check the others.

  1. ASegregate duties of receipt issue, ledger maintenance and bank deposit among different persons, with independent reconciliationCorrect
  2. BIncrease the tuition fees charged
  3. CAppoint more teaching staff
  4. DShift the fee ledger from manual to handwritten format

Explanation

One person handling receipts, records and deposits can misappropriate cash and conceal it, for example by lapping. Segregation of duties with an independent reconciliation of receipts, ledger and bank credits reduces this risk. The other options do not touch the control weakness.

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