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This identifies internal control weaknesses & provides fixes

Based on the following summary, I am to write a letter to Jerry Mays, owner of the Manhattan Company, explaining the weaknesses in internal control and your recommendation for improving the system.

As a new auditor for the CPA firm of Croix, Marais, and Kale, you have been assigned to review the internal controls over mail cash receipts of Manhattan Company. Your review reveals the following: Checks are promptly endorsed "For Deposit Only", but no list of the checks is prepared by the person opening the mail. The mail is opened either by the cashier or by the employee who maintains the accounts receivable records. Mail receipts are deposited in the bank weekly by the cashier.

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PROBLEM: The first problem is that the checks are endorsed as for deposit only, with no supporting information on any document because there is no list of checks. Even though the checks are endorsed as "for deposit only," they can still be tampered with, and the employee opening the checks could alter the checks and deposit the checks into their own bank account by stealing a check.

SOLUTION: The person opening the checks should prepare a list of customers that mailed in ...

Solution Summary

The solution shows the problems in the internal control system and recommends to Jerry Mays, owner of the Manhattan Company, the steps needed to correct the weaknesses.

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