The matter listed below are always included in the internal control of a firm. You are required to explain the purpose of each of the items listed as (a), below. Indicate the compliance tests you would carry out in order to ensure that the intended controls were operating properly. (a) A requirement that mail is opened by two responsible employees who must promptly make listings of all receipts

  • The purpose of requiring that mail is opened by two persons
  •  To ensure that all receipts by mail are accounted for. The two persons will over look the activities of each other to ensure that all collections are recorded;
  •  To reduce the risk that one individual could be tempted to conceal some of the receipts and latter misappropriate the collections;
  •  To ensure that the receipts are accurately recorded. One person will counter check to ensure that the receipts are correctly recorded.
  • The tests of controls that I would carry out in order to ensure that the control was operating properly will include:
  •  Attending one of the sessions when mail is being opened to observe that the exercise is conducted by two persons;
  •  Inspecting the listing of the receipts to confirm that it is accurately prepared and all the receipts for the day are recorded;
  •  Inquiring from officials of the client that the opening of the mail is always conducted by two persons and inspecting a sample of the listings prepared during the year to confirm that there is evidence that the mail opening was indeed conducted by two persons.

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