Serena Is the Assistant Controller of Opus Inc

question 52

Essay

Serena is the assistant controller of Opus Inc.As a result of a recent expansion,the controller has been very busy and delegated the signing authority for cheques to Serena.Further,due to the cash accountant leaving on maternity leave,Serena was asked to perform the bank reconciliation until they found someone to replace the cash accountant.
Serena is a qualified accountant and has been able to handle all of these additional tasks.However,she asked her boss for a raise to compensate her for the additional responsibilities that she currently has.Her boss indicated that this was only temporary and the company could not afford a raise for now.
Serena created a vendor in the system with her home address.She has been paying this vendor $2000 for the past 3 months as a means of compensating herself.This theft has yet to be discovered by Opus.
Required: A)What internal controls are missing that enable the theft to occur? B)What audit procedures might detect the theft?

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Definitions:

Lapse of Time

Lapse of time refers to the expiration or running out of an established period, often resulting in the termination of a right or offer due to inaction within the specified timeframe.

Theory of Misrepresentation

A legal concept indicating that an agreement can be annulled if consent was obtained through false statements.

No Training

Indicates a situation or condition where education or instruction has not been provided.

Partially Disclosed Principal

A partially disclosed principal is a party in an agency relationship whose existence is known to a third party, but their identity is not revealed.