45) Internal Control Questionnaire Items: Possible Error or Fraud Due to Weakness. Refer to the internal control questionnaire for the production cycle (Appendix Exhibit 9A.1) and assume that the answer to each question is ânoâ Prepare a table matching questions to errors of frauds that could occur because of the absence of the control. Your column headings should be as follows:
Occurrence Yes /No Comments
1) Is cost accounting separate from production, payroll, and inventory control?
2) Is access to blank production order forms restricted to authorized persons?
3) Is access to blank bills of materials and labor requisitions restricted to authorized persons?
4) Is access to blank material requisitions forms restricted to authorized persons?
5) Are production orders prepared by authorized persons?
6) Are bills of materials and labor needs prepared by authorized persons?
7) Are material usage reports compared to job time tickets?
8) Are labor usage reports compared to job time tickets?
9) Are material requisitions and job time tickets reviewed by the production supervisor after the floor supervisor prepares them?
10) Are the weekly direct labor and materials used by the production supervisor after preparation by the floor supervisor?
Completeness
1) Are production orders prenumbered and the numerical sequence checked for missing documents?
2) Are bills of materials and labor needs forms prenumbered and the numerical sequence checked for missing documents?
3) Are materials requisitions and job time tickets prenumbered and the numerical sequence checked for missing documents?
4) Are inventory issue forms prenumbered and the numerical sequence checked for missing documents?
5) Is an accounting notified of terms on purchases agreements
6) Is accounting notified of orders received on consignment?
Accuracy
1) Are difference between inventory issue forms and materials used reports recorded and reported to the costs accounting supervisor?
2) Are differences between job time tickets and the labor report recorded and reported to the cost accounting supervisor?
3) Are standard costs used? If so, are they reviewed and revised periodically?
4) Are reports materials issued to production reconciled with finished goods reports?
Cutoff
1) Does the accounting manual give instructions to date entries on the date of use?
2) Does an accounting supervisor review monthly, quarterly, and year-end costs accruals?
Classification
1) Are summary entries reviewed and approved by the cost accounting supervisor
2) Does the accounting manual give instructions for proper classification of cost accounting transactions?
