Auditing

Audit BUSI 0006-H Case Synthesis 1

Red Bluff student lodging & Café
Internal Control on Financial Reporting

Group division Lee Yuk Ying 2008144814 Lui Kei Chi 20096262560 Yuen Man Hong 2009530474 Huang Jialin 2009800594

2012/2/21

1.

One of the biggest concerns in the motel business is that motel tax might be understated by the twin. As the oppose is amenable for most of the motel operations exchangeable maintenance of occupancy and rental records and most important, cash handling, at that place is a likely chance for them to understate the business r flatue in case the internal control is not qualified enough. In order to reduce the risk, Matthew could set up a set of proper bookkeeping policies and procedures. For example, keeping a depone ledger for all transactions while requiring a avow statement to be sent to Matthew indirectly for checking purpose. There is likewise a tendency for the couple to include personal expenses in the business expenses account. Matthew underside require the couple to keep both receipt for all business transactions as to assuage the risk. An independent assurance provider could also be employ to perform periodic checks to make sure the accounts are accurate.

2.





For the café business, the couple may allow their families and friends to gravel meals with special discounts or even without charge. To evade the possible loss, separation of duties provoke be utilize here. For instance, the cashier should not be the same person responsible for recording the business transactions. Computerized devices such as PDA can also be installed so orders will be record accurately without orders omission. Another high risk fraud is the couple might purchase some cheaper ingredients and record as if they have purchased some expensive, high quality ingredients to earn the difference. This risk can be reduced by requesting suppliers to send out receipt to Matthew periodically and requiring the approval from Matthew before making any payments to suppliers.

3.

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